Better realisations keep Indian steel mills active in HRC exports to EU

• Indian HRC export prices for EU rise to $1,250/t CFR
• No firm offers heard for Vietnam, UAE & Nepal
• Rising Covid cases in China & drop in steel futures weigh down global sentiments

Indian steel majors continued to focus on the European market for HRC exports amidst higher realizations with each successive deal. Deals in small parcels were heard concluded at $1,200/t CFR Europe, $1,220/t CFR and $1,250/t CFR in the past seven-day period with all the deliveries to be made in May’22. Moreover, offers afloat in the market at present range between $1,200-1,250/t CFR Europe.

Higher realizations from the EU market have kept the interest of Indian mills fixed which has led to the withholding of offers for the traditional markets of Vietnam, Middle East and Nepal by major steel producers. Firm HRC export offers from Indian steel giants in the mentioned countries were last heard around mid-Feb’22.

• EU factor: The European Commission has put forth its intent on restricting trade ties with Russia and restraining on other benefits amidst the invasion carried out on Ukraine in late February this year. The EC will prohibit the import of key goods in the iron and steel sector from the Russian Federation. The European Union is the largest importer of Russia’s steel at 8.83 mnt in 2021, up by a sharp 58% y-o-y against 5.60 mnt in the previous calendar year.On 10 Mar’22, ArcelorMittal*, Europe announced another steep hike of Euro 150/t ($166/t) in its flat rolled product portfolio, after having increased prices by Euro 180/t ($200/t) in the beginning of the month. Post-the recent announcement, effective prices of HRCs now stand at Euro 1,300/t ($1,435/t), while prices of CRCs are at Euro 1,400/t ($1,545/t), and hot dipped galvanised (HDG) at Euro 1,450/t ($1,601/t).
• Indian mills still not aggressively offering for exports: However, Indian mills are decently packed with good volumes in their export order books for April as well. A few domestic players are quiet even in the European market amidst low export allocations and preference for catering to domestic demand in April and May. India’s flat steel exports rose sharply to 0.84 mnt in Feb’22 compared with 0.56 mnt a month ago, SteelMint data shows.

Chinese HRC prices weighed down by rising Covid cases: Chinese mills continue to gain from limited competition from India and Russia in the Southeast Asian markets. Also, the former is enjoying cost advantage in the Vietnamese market with Japanese mills maintaining their offers at elevated levels. However, amidst a decline in the Chinese futures market, HRC export offers also showed a fall this week. For instance, export offers to Pakistan have fallen to $875-880/t CFR from the previous week’s levels of $945-950/t CFR. Also, for the Vietnamese market, offers have come down to $900/t CFR from the previous week’s levels of $945-955/t CFR.

This has somehow turned the global sentiments bearish and buyers are waiting for a clearer price outlook.