Indian billet export offers reported a surge of $10-15/t on bullish global sentiments, although no bookings were concluded at the increased offers. SteelMint assessed Indian billet (150x150mm, BF-grade, fob East Coast) export prices at $430-435/t, up by $10-15/t week-on-week.
Joe Biden’s narrow win at the recent US elections and pharma major Pfizer’s claim to come out with a coronavirus vaccine by year-end have lent support to Chinese steel futures, analysts believe.
The reinforcement bar (rebar) contract on the Shanghai Futures Exchange (SHFE) gained by about $15/t in the last one week.
Driving Factors
Chinese Steel futures: According to data maintained with SteelMint, the futures recorded an increase of $9 w-o-w and settled at $579/t on 13 Nov’20. China’s infrastructure-led economic growth has been surprising, with world steel forecasting China’s steel demand to rise by 1% in 2020 against demand contraction in the rest of the world.
Strong Yuan gives room for billet imports: Yuan witnessed an appreciation against $, post US elections. For instance, during Oct’20, the Yuan was hovering between RMB 6.72-6.80 against $. While in Nov’20, the same was in the range of RMB 6.60-6.67. Yuan’s appreciation is likely to drive billet imports in China. Also, continuous rising domestic prices will support the event. The domestic billet prices in China saw a w-o-w rise of RMB 100/t ($15/t), and yesterday settled at RMB 3,580/t ($542/t). The continuous rising domestic prices are likely to drive billet imports in the country.
China imported 2.87 mn t of billets from India in H1 FY21. SteelMint has reported that the momentum may not fizzle out in H2, with exports by some integrated players and west coast-based induction furnace steel producers continuing through to Mar’21.
Tight availability of scrap: Tight availability of ferrous scrap has led to consistent price hikes across the globe. Chinese scrap purchase price nearly hit 7.5 years high recently. Turkish import prices have soared too. Leading subcontinent-based consumers have to buy at prices that have hit their highest levels in over a year. The major scrap-generating countries are still battling the after-effects of the pandemic and production and hence global supply has been tight.
Limited availability of the containers has also pulled up the scrap prices. It has consequently led the buyers to buy billets instead of scrap, resulting in increased demand for billets, and so as the global billet prices.
In this context, India’s exports of semi-finished steel could gain some momentum, especially with iron ore and scrap prices at all-time high levels.
Better domestic realizations: India is slowly shaking off the recessionary impact of the pandemic and infrastructure and construction activities have started picking up since Sept’20. Long steel prices too have shot up with growth in demand. BF-grade rebar (12-25 mm, exy-Mumbai) has shot up by INR 2,200/t in one month.
Billet prices too are rising. SteelMint’s billet index (ex-works Raipur) shot up by INR 550/t over the last week. Many primary mills have reduced export allocations with recovering domestic demand. Robust domestic prices, better domestic realizations, and low export allocations just about sum up the Indian billet export scenario at present.
Offers rise from other destinations: The above events have pulled up the export offers from CIS and Iran as well. CIS offers have seen at $ 420-425/t, FoB Black Sea (up by $10-12/t, w-o-w) while Iranian billet export offers were at $415-420, FoB Iran (up by $5-8/t, w-o-w).
Indian billet exports drop 22% in Oct’20
Meanwhile, India’s billet export shipments saw a fall of 22% in Oct’20 to reach 520,000 t. China (97,021 t), Sri Lanka (77,000 t), and Indonesia (61,000 t) remained the predominant importers of Indian billets, followed by Malaysia and Thailand. RINL, JSPL, SAIL, and Mono Steel were the leading exporters during the period under consideration.
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