Indian mills’ July shipments almost full, prices to stay firm

Large mills in India are on a strong wicket at present in terms of domestic pricing, riding high on exports. This is particularly so for flats.

SteelMint heard from trade sources that leading mills are at least 60 to 70% booked even for their Jul ’21 shipments. For instance, it seems that a leading private sector primary mill from eastern India is not offering any material for July shipments but only for Aug’21.

Another leading flats steel major has an export allocation of 100,000 to 120,000 tonnes but has already booked around 60% for July deliveries.

In fact, major Indian steelmakers have reportedly booked around 80,000 t of HRCs to the UAE at $1,030-1,050/t, CFR basis, for Jul to Aug shipments. Lower HRC export offers to Vietnam and exhausted HRC import quota to Europe have shifted the focus of Indian steel mills to the Middle-East and Turkey.

However, there is a certain amount of spill over from June deliveries into July as well since exporters, in the current month, are still facing vessel availability issues and lower port handling despite Covid cases declining.

Sources have informed that overall, mills at present, are not under pressure to either book fresh July shipments or lower flats prices — in fact, they can afford to sustain the present domestic price levels.

Long story cut short

In longs, however, the exports scenario is not so upbeat. We learned that around 100,000- 125,000 t are on offer in the market but there are few takers. This is because of the following possible reasons:-

• Most long products have a market in South East Asia and flats, in Europe and Turkey. Vessel availability is now fairly better in Europe compared to South East Asia, where Covid cases are still high with quarantine norms in place.
• China is the largest buyer of billets globally but at present, as already mentioned, it is not in buying mode.
• Rebar demand is relatively low as compared to flats all across the world (one of the reason why price spreads between longs and flats are at a historic high).

Outlook

Flat prices have enough reasons to sustain in the domestic market. On the other hand, SteelMint estimates that longs prices are also unlikely to fall. The spread between flats and longs have widened by INR 18,000-20,000/t. This is essentially because longs have remained stable while flats prices have risen steadily. Ex-mills HRC prices are at INR 68,000-69,000/t, while re-bars are ruling at INR 51,000-51,500/t, excluding 18% GST.

“Longs have limited scope of correction since they are already trading at discounted prices,” a source was quoted as saying.

SteelMint’s daily billet index closed at INR 43,300/t exw Raipur, registering an increase of INR 200/t Whereas scrap index also increased by INR 600/t/t to close at INR 40,300/t DAP Mandi Gobindgarh.

Chinese Steel Futures:

Chinese steel iron ore futures increased on expectations of stricter environmental controls after the Dragon Boat Festival holiday in China early next week.