Indian mills book around 300,000 t billets for Mar ’21 shipments

Indian mills were found actively operating in the global billet market during Feb ’21. Around 300,000 t of billets were reported to have been booked in the price range of $510-540/t, FoB India, with China, SE Asia, and Nepal as the likely destinations.

The bookings were largely done after the Chinese new-year holidays. RINL, SAIL, and JSPL stood as the predominant exporters. According to our analysis, Indian billets export shipments are likely to witness around a 50% m-o-m rise in Mar ’21, from approximately 200,000 t in Feb ’21.

Instances that boosted Indian billets bookings-

• Sluggish domestic demand: In the wake of increased production, coupled with sluggish finished steel demand, the Indian mills turned active in the export markets.
• Pressure on primary producers amid recent government notification: The Centre recently released an important notification that will alleviate the conditions of the secondary producers but put more pressure on domestic prices. As per the new notification, the government has allowed the usage of steel produced by secondary steel manufacturers in the construction of highways.
  Earlier, in such projects, road developers were required to use steel produced by the primary producers. The decision has been taken because of the rising prices of the steel supplied by the primary mills. This is likely to lower the rebar price differential between primary and secondary mills.
  Thus, primary Indian mills are likely to remain active in the export market in both the semi-finished and finished steel segments. Also, the seasonal demand from China is likely to pull up Indian billets imports.
• Rising Chinese domestic billets prices: Post-Chinese New Year holidays (CNY), domestic billets prices in China shot up to reach RMB 4270/t ($661/t), exw including 13% VAT, as just before the holidays the mills had fixed the prices at RMB 3850/t, exw including 13% VAT, till 17 Feb ’21. Owing to this, the mills in Tangshan incurred losses of up to RMB 200/t.
• Hence, to make up for the losses, the mills increased the prices post-holidays, but consequently created room for billets imports as well.
• Rising global scrap prices: Imported scrap prices to Turkey have hit a one-month high in recently concluded deals from Baltic, European, and USA origin. Prices have risen by $35 as compared to the mid of last week. SteelMint’s assessment for US-origin HMS 1&2 (80:20) now stands at $453/t CFR Turkey.
  In addition to it, scrap prices in China have also risen in both domestic and imported markets. Eastern China’s largest EAF steelmaker- Shagang Steel has raised scrap purchase price today by RMB 100/t ($15) for all grades, credible sources reported to SteelMint. The price for HMS (6-10 mm) stands at RMB 3,390/t ($523), inclusive of 13% VAT, delivered to headquarters.

Outlook: The Indian domestic demand is likely to remain sluggish in Apr ’21 amid lethargy in construction activities. Hence, Indian mills are likely to remain active in the global market.