Chinese HRC offers fell by USD 5/MT in comparison to last week following yuan devaluation.
With the recent move of China to devalue its currency against US dollar, Chinese export offers have become cheaper in the global market. 2.5 mm HRC offers from China are being assessed at USD 305-310/MT FOB China and around 325/MT, CNF India basis.
China is facing demand supply mismatch since last few months in steel sector, which has pushed its flat steel prices downwards. Overcapacity of Chinese steel mills has pressurized manufacturers to dump steel below fair-value prices in foreign markets. Yuan depreciation was an intended decision by the government to make its export more competitive and to restrict import.
As per trade sources, Chinese HRC offers are likely to fall further for October shipments. Also, demand conditions in Indian market is likely to improve post October.
2.5 mm grade HRC offers from Japan and Korea are being assessed at USD 375/MT and USD 380/MT, CNF India basis. As per trade sources, there is no major buying interest at this level because of cheap Chinese offers.
CRC Offers
Current offers for commercial grade 0.9 mm CRC from China are assessed at USD 390/MT and USD 440/MT from Japan. All prices are on CNF India basis.
Support to domestic market
The devaluation of Yuan has strengthened US dollar resulting in increased pressure on other currencies. The Indian rupee sank to a two-year low following Yuan’s depreciation. This has made import costlier for Indian players. Indian steel players are hopeful that expensive import will support domestic demand of steel output.
Safeguard duty on HRC likely
Indian government may impose a safeguard duty of 20-40% on import of HRC within this month, according to Steel Authority of India (SAIL). Safeguard duty will be applicable on imports from Korea, Japan, which are currently covered under foreign trade agreement. Safeguard duty will make imports dearer by INR 4000-5000/MT.
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