Since the starting of the month, billet market have been stable with minor price fluctuation of INR 100-500/MT. Few factors like high imported scrap offers in global market and improvement in billet export market have maintained the sustainability.
High imported scrap offers: Turkey, the world’s largest scrap importer, with an annual import of 19 MnT, has been actively participating in buying activities; leading to upsurge in global scrap prices. This in turn has made Indian importers to stay away from the seaborne trade.
Indian importers are not accepting higher offers due to availability of cheap sponge iron and scrap in domestic market. Sponge iron prices in domestic market have not increased in-line with global scrap prices.
Imported scrap (shredded) offers up by USD 20-30/MT to USD 270/MT, whereas, sponge prices (P-DRI) in Raipur are evaluated at the same price of INR 11,200-11,300/MT (compared to 1 month price). However, billet prices in the same duration in Mumbai have moved up by INR 600/MT to INR 24,300/MT.
Buyers prefer to stick to sponge iron rather than importing expensive scrap. This in turn has supported billet market. Approximately, 25% of India’s total crude steel comes from sponge iron and around 17% from melting scrap.
High potential export market: Indian billet export to Bangladesh and Nepal has increased by twofold in Feb’16 compared to Jan’16. In FY15, India exported 1.16 MnT of ingot/billet/blooms, which reached to 0.88 MnT in FY16 (consider HS Code 72071190, 72071920, 72071990).
The prime cause of such rise in export quantity is SAFTA agreement that attracts zero duty for SAARC nations. Presently, duty is zero whereas, its around USD 90/MT from other nations (including China).
Steel majors like RINL exported 57,000 MT billet from Vizag Port to Chittagong, Bangladesh and about 28,000 MT from Kolkata by road. The major buyer for billet was Bangladesh due to high imported scrap and low billet price. India also exported material to Italy from Chennai port.
Where billet prices head towards?
Viewing the overall market sentiments, it seems billet prices will find sustainability in present price and will correct before monsoon. Limited water supply to rolling mills and construction sector, including labour shortage may pull down prices in coming days. However, robust scrap and global billet prices will support Indian domestic prices.
Current billet offers are hovering in the range of INR 21,700-25,300/MT, equivalent to USD 325-370/MT. Whereas, FOB China offers are assessed at USD 370/MT.
Leave a Reply