Indian HRC export indications to the traditional markets of Vietnam and UAE have dropped steeply this week, pulling the same to a 2-year low. This has pulled down Steelmint’s India HRC export index to $518/t FOB east coast contrasted against the previous week’s $573/t FOB. The index has fallen to around 2-years’ low, as per SteelMint records.
“Southeast Asian countries are turning aggressive on the global HRC trade platform. China too has seen a significant drop in both export offers and bids from buyers. However, the recovery in Chinese steel futures may support the export offers in the near term,” said sources.
Rationale: Eleven indicative prices were considered as T2 inputs, while there were no deals reported under T1. The final price was an average of T1 and T2 inputs which stood at $518/t FOB. CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.
Market highlights:
1. Vietnam mills’ price announcements soon, market turns slow: The Vietnamese imported HRC market has turned slow as buyers are expecting domestic mills to announce prices in the next few days. The announcement will be for January and early-February 2023 delivery. Furthermore, Chinese mills have turned aggressive in the market cutting prices steeply to $500-510/t CFR from indications of $600/t CFR in the last couple of weeks. This has led to a drop in Indian offer indications to around $550-570/t CFR.
Moreover, Vietnam’s domestic integrated steel producer Hoa Phat has decided to shut down a couple of its blast furnaces (BFs) amid slow demand in the market. The company is mulling suspension of operations of two BFs in Dung Quat and two others in Hai Duong region this month. Furthermore, there is likelihood of suspension of another BF in the Dung Quat region in December. Slow exports, weak construction activities, high raw material costs and pile-up of inventories sufficient for the upcoming few months are among the lead reasons, SteelMint learnt from sources.
2. Buying interest dips to sub-$540/t CFR in UAE: Buyers in the UAE are turning bearish amid continual decline in global HRC export offers. This has made buyers bid below $540/t CFR levels. Chinese HRCs are heard being offered at around $550-560/t CFR, down from previous week’s indications of $570/t CFR. Moreover, indications from Indian mills, which were floating around $620-630/t CFR for quite some time, have dropped to $560-580/t CFR levels this week.
3. Rising concerns keeps European market lacklustre: Appreciation of the dollar, gas and electricity prices still on the higher side and alloyed HRCs from Indian mills have kept the trade momentum slow in the EU. Competition is increasing among other exporting countries, especially those from Southeast Asia and Far East. Buying interest is still low from the major steel consuming sectors of construction and automotives in the EU, adding to concerns. Indian HRC (S275) export indications were heard at around $630-640/t CFR Antwerp, with no firm bids from the market, sources informed.
Outlook: Chinese HRC January 2023 contract closed today at RMB 3,621/t, up by RMB 114/t w-o-w. Market participants expect the recovery in futures to support their export offers, which may lead to some recovery in global prices. Meanwhile, Indian mills continue to remain focused on domestic sales, amidst better realizations.
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