Indian HRC Makers Hold Export Offers on Better Realizations in Domestic Market

Indian steel mills have maintained HRC export offers on better realizations in domestic market. Export is likely to remain low in FY16.

Indian HRC manufacturers continue to remain non-competitive in global market by holding the HRC export offers at the same levels. Current offers for 2.5 mm HRC have remained stable at USD 400/MT, FoB India.

As per our trade sources, though, global buyers are preferring cheaper offers of Chinese, Korean and Japanese manufacturers, high production cost and better sales realization in the domestic market are compelling Indian players to focus only in the domestic market. Net Sales Realizations (NSR) from export will be around INR 25,000-26,000/MT. Whereas, domestic realizations will be in the range of INR 27,000-28,000/MT on ex- factory basis.

Indian HRC Export Falls

This switch in focus of Indian players has affected the overall Indian HRC exports. Indian’s export declined from 0.12 MnT in Mar’15 to 0.063 MnT in Apr’15 and further to 0.049 MnT in May’15. In order to offset low export, Indian players are offering discounts on bulk purchase in domestic market.

JSW Steel Increases CRC Capacity

“JSW, India’s largest flat steel exporter, is all set to increase its value added steel production capacity of 3.5 MnT to 5 MnT pa at its Cold Rolled Mill (CRM) in VIjaynagar, Karnataka. This will increase their captive consumption for HRC,” said a trade source.

He added further, the company has also reduced their export allotments from last few months.

Indian mills are optimistic that the government may further impose safeguard duty on imported flat steel products, which will be applicable not only to Chinese but also on Japanese and Korean mills (These are under FTA (Free Trade Agreement) and enjoy lower rate of basic custom duty).

As domestic players are majorly focusing in the Indian market, it is anticipated that export will fall in FY16. The government’s measures to curb cheaper import by imposing safeguard duty might help the Indian HRC industry, which is currently reeling under pressure from foreign markets.

HRC Prices as on 21 Jul’15

*Prices in INR/MT; inclusive of 12.5% Excise duty, VAT extra
#Prices in RMB/MT; 17% VAT included
Source: SteelMint Research