The export offers for Flat products have seen some correction as international prices continue to be under pressure. Current export offers from India are at USD 535-540/MT FOB India.
On account of a slowdown in the domestic market, many domestic steel manufacturers relied on the exports market till end of March, 2014. However, the volume of exports for Hot rolled products has slowed down slightly post March. Exports of Hot rolled products stood at around 0.65 MnT in Q4 FY14, however this reduced by 12 % to around 0.57 MnT in Q1 FY15. A trend of exports over the past few months is as shown under.
Factors impacting Exports
Appreciation of exchange rate might have affected the volume of exports to certain extent. Moreover, it is to be noted that international prices for HRC had seen some correction in the past few months.
India mainly exported HR Coils to Middle East and European countries. Prices in Middle East & European countries were down by around 4% and 2% respectively between Apr’14-Jun’14. HR prices in Middle East came down to around USD 560-570/MT now as compared to USD 600/MT in the first week of April, 2014. Similarly, Hot rolled prices in Europe too came down from USD 585/MT levels to USD 557/MT now.
Slowdown in export market is likely to affect the domestic pricing as well. Domestic HR Coils prices in North India had been trading at a discount of INR 500-700/MT as reported by SteelMint earlier. A correction in international prices and pressure on domestic prices may push manufacturers for a price cut in the upcoming months.
Many market participants believe that prices will hold on to the current levels if uncertainty in Iron ore mining continues, however if the mining issues are resolved and the availability of Iron ore improves; there are fair chances that the prices may correct further.
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