Key highlights:
– Two Indian HRC export deals concluded for end Apr-May shipments
– Chinese mills raise offers further on possible rebate cuts
– Market awaits price revision by Formosa, expected to raise offers by $20-25
Indian steel mills have managed to conclude HRC export deals at increased offers of $745-750/t CFR Vietnam, up by $5-10 against last deals.
Recent deals booked to Vietnam
1. Eastern India based major steel mill booked around 30,000 t HRC to Vietnam at $738-740/t CFR basis for end Apr- May shipments
2. Another steel mill based in western India eyeing to book around 30,000 t HRC to Vietnam at $740-745/t CFR basis for Mar end Apr shipments.However, this deal is still under negotiation.
Chinese mills continue to increase export offers to Vietnam- Chinese mills are offering HRC export offers to Vietnam at $760/t CFR which was around $740/t CFR last week. Strong Chinese futures and possible rebate cuts to curb excess steel output resulted in a significant hike in Chinese offers.
Key highlights driving HRC offers:
a. Higher offers from India on subdued domestic demand- Indian mills are actively exploring export options due to sluggish demand in the domestic market. Thus they have raised HRC offers due to healthy demand in exports and higher prices realizations in the overseas market.
b. Export rebate cuts in China, status unclear- The lack of clarity over the acceptance of export rebate cuts remains a concern for steel manufacturers in China. This resulted in higher HRC export offers from China. Few mills have introduced a new clause of loss to be borne partially or fully by the buying party in case the rebate cut is enacted by the government.
c. Soring freight charges- The shipping industry is charging higher freight costs over the lower availability of containers, most of which have been kept unopened at the ports since the peak of the COVID-19 pandemic. This has resulted in hindrances and resulting in higher offers from major exporting nations.
d. Japan and South Korea continue to offer HRC at a premium- Mills in Japan and South Korea have been consistently offering at a premium over Chinese and Indian offers. The mills in these two countries are majorly focusing on the domestic market and thus offering a premium to overseas markets.
In an attempt to boost efficiency and cut carbon emissions, Japan’s Nippon Steel is planning to reduce its crude steelmaking capacity by 20% to 40 mn t, SteelMint learned from the company’s press release. Overall, the steel major will reduce the blast furnaces it operates in Japan to 10 from 14 under its new five-year plan.
Domestic market updates-
i. Vietnam based integrated steel mill Formosa Ha Tinh is likely to revise its HRC offers this week. The mill is planning to raise HRC offers by $20-25 m-o-m in line with higher imported HRC offers from India and China.
ii. Last week, Hoa Phat, announced an increase in HRC (SAE1006/SS400) at $685-690/t CIF basis for Apr-May deliveries.
Short-term outlook- Indian and Chinese steel mills are likely to raise HRC export offers to Vietnam in the near term on better demand. Thus SteelMint anticipates that imported HRC offers to Vietnam will remain strong in the near term.
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