SteelMint’s Indian HRC (SAE 1006) export index stands at $896/tonne (t) FoB east-coast basis, increasing by $14/t against $882/t FoB w-o-w. A steep hike in export offers from Chinese and Indian mills have lifted the index. Indian mills have raised HRC export offers for Vietnam to $930-935/t, CFR Vietnam, after concluding deals at $915-920/t CFR early last week.
Chinese HRC export offers have also risen after hike in futures. SHFE HRC futures Oct contracts closed at RMB 5,968/t ($921), up by RMB 42 ($6) d-o-d. Also, it is expected that Indian HRC export offers may increase further on global cues.
However currently, there are no active offers for the UAE market due to the Eid holidays.
Rationale
Nine indicative prices were considered as T2 inputs which stood at $896/t FoB. The CFR prices were converted to FoB equivalent by deducting freight costs from the buyer/seller.
Global HRC market overview
1. China’s HRC export offers inch up on possible supply constraints- The Chinese HRC export offers have inched up to $940-950/t FoB, reducing the gap from $930-950/t FoB a week ago. Possible reasons behind the increase are:
a) Gains in the futures market.
b) Anticipation of supply constraints on production cuts in H2CY’21.
c) After Tangshan, provinces of Yunnan and Henan will see production cuts owing to power supply issues.
d) The National Development and Reform Commission (NDRC) announced an increase in the vigilance of futures and spot markets to stabilise prices for commodities.
2. CIS export offers unchanged this week- Steel mills in the CIS region kept their offers flat at $920-940/t FoB Black Sea against the previous week. Lower bids from importing countries and increased competition from Asian countries in the traditional CIS export markets continue to impact offers from the region.
3. Formosa Ha Tinh cuts HRC prices by $60/t m-o-m for Sept deliveries- Vietnamese major steel producer Formosa cut its HRC prices steeply by $60/t to $970/t CIF for Sept deliveries.
Reasons behind the decline in offers:
a) The market disruptions owing to the surge in new Covid-19 cases. The country is seeing a spike of over 2,000 new cases since mid-June.
b) Adverse impact of the monsoons on the activities of major steel-consuming sectors.
c) Imported HRC offers had started to come down since the beginning of Jun when the offers were around $985-990/t CFR from China to $920-930/t CFR at the beginning of July.
4. Imported HRCs to Vietnam rise w-o-w- Imported HRC offers to Vietnam witnessed an uptrend in offers from the Chinese mills this week. The offers have moved up to $20/t w-o-w from China, whereas Indian offers increased by $10-15/t.
Current week’s offers:
a) Chinese mills’ offers are heard at around $940-950/t CFR.
b) Indian mills are offering at $930-935/t CFR.
c) Offers of Russian mills are flat at $890/t CFR against the previous week.
5. Pakistani importers see an increase in offers from Japan- Imported HRC offers to Pakistan have increased by around $20/t w-o-w from Japanese mills. Increased focus on catering to domestic demand and a continual increase in global HRC export offers in the past couple of weeks have pushed Japanese mills to quote higher offers.
Current week’s offers:
a) Offers from Japan stand at around $1,080/t CFR.
b) South Korean HRCs are being offered at $1,070/t CFR.
c) Taiwanese mills resumed offering HRCs at $1,080/t CFR.
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