After remaining muted for a few weeks, the Indian HRC export market witnessed some deals this week. However, the HRC export index dropped by around $35/t this week to stand at $840/t FOB east coast.
Towards the end of the previous week, a deal involving 20,000 t of HRCs (SAE1006) was heard booked at $890/t CFR UAE for Dec’21 shipments. However, other trade sources expect further correction, given the consistent drop in Chinese offers.
Rationale: Seven indicative prices were considered as T2 inputs while one export deals was reported as T1. The final price was an average of T1 and T2 inputs which stood at $840/t FOB. The CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.
A few mills have started quoting HRCs for exports at around $890/t CFR to the UAE, while indications for Vietnamese markets were heard at around $855/t CFR basis. The prior offers for the mentioned regions stood at around $910-920/t CFR basis.
Few trade sources highlighted that some mills are also exploring HRC offers to Turkey as well.
No offers were heard for Nepal this week. The last offers heard were at $895-905/t CFR Raxual border (equivalent to $875-885/t ex-mill).
What factors have weighed on the Indian HRC export offers?
1. Continual decline in the Chinese HRC export offers: The Chinese HRC (SS400) export offers have come down to $780-790/t FOB China basis, down by $30/t w-o-w.
The lack of clarity on an export tax announcement by the government and the contract clause stating ‘buyers to shoulder any losses arising out of the tax announcement’ has kept a low buying preference for Chinese-origin HRCs in the overseas market. This has pulled down offers from other exporting countries, including India.
2. Slow demand from importing countries: Bids in key market Vietnam has continued to remain on the lower side. The Vietnamese market participants have continued to prefer domestically produced HRCs over imported ones with mills announcing a reduction in prices for Jan’22 shipments.
a. Formosa had reduced HRC (SAE 1006, skinpass) prices by around $40-45/t towards the end of last week. Offers now stand at $885/t CIF Ho Chi Minh.
b. Hoa Phat announced a cut of around $57/t in its offers for HRC (SAE 1006, skinpass) and is now offering at $835/t CIF Ho Chi Minh basis.
3. Indian HRC prices fell towards last weekend: For the previous week, SteelMint’s benchmark assessment for HRCs (IS2062, 2.5-8mm) was assessed around INR 71,500-72,500/t ($960-974/t) exy Mumbai basis, exclusive of GST @ 18%.
The prices had witnessed an uptick in the first half of last week as the market resumed after the Diwali holidays. However, market sentiments weakened with low buying interest at these price levels, and a continual decline in Chinese export HRC offers.
Outlook: Trade sources opine that aggressive HRC offers from Chinese traders may keep global prices under pressure in the near term.
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