Indian steel mills are aggressively booking hot rolled coils (HRCs) for exports to offset the tepid demand in the local market. Mills have started exploring new avenues in the export market, booking mainly to Vietnam, Turkey, and the UAE for Aug-Sep’21 shipments.
Around 1,00,000 tonnes (t) of HRCs were booked in the last one week for Aug-Sep’21 shipments. This week, mills raised HRC export offers by $5-10/t to $920-925/t CFR Vietnam in the recent deals concluded. However, last week’s deals were concluded at $915-920/t CFR Vietnam. The rise in HRC prices comes on the back of a recent hike in Chinese steel futures. According to data maintained with SteelMint, the Shanghai Futures Exchange (SHFE) HRC futures Oct’21 contract, on 15 Jul’21, closed at RMB 5,962/t ($922/t) up by RMB 212/t w-o-w. Apart from Vietnam, a few parcels have been booked to Turkey at a $940-950/t CFR basis.
Why has Indian HRC export market turned active?
1. Sluggish demand in the domestic market: As per SteelMint’s assessment, prices of the benchmark 2.5mm HRC stands at INR 64,000-65,000/t (exy-Mumbai), showing a decline of INR 500-1,000/t w-o-w, as against INR 64,500-65,500/t (exy-Mumbai) seen last week. The prices mentioned above do not include GST @18%. In addition, there is a huge disparity between the mill and trade prices since buyers are unlikely to purchase material at higher offers. Despite rebates and discounts by Indian mills, domestic trade prices fell in regional markets.
2. Vietnam importers preferring India over other exporting nations: Vietnam importers are always looking for cheaper HRC cargoes, mainly from India and China. Thus, buyers started taking position for HRC cargoes from India since China mills may limit their exports in the near term owing to recently announced production cuts. Also, due to delayed price announcement by Vietnam’s domestic mills, buyers resumed importing HRCs from India. Also, Japanese mills are offering HRCs at a premium and the Russian government is planning to impose an export tax which may impact imports to Vietnam.
3. Vietnam steel imports up 18% m-o-m: Vietnam steel imports stood at 1.12 mn t in Jun’21 up by 18% m-o-m against May’21, as per the data compiled by Vietnam’s general department of customs. Also, Vietnam’s Hoa Phat reported that galvanised steel output touched nearly 1,60,000 t in H1 (Jan-Jun’21), higher by 2.8 times as compared to the same period last year. Thus, Vietnam importers are keen on booking HRCs due to improved downstream demand.
Will Indian HRC exports remain active in the near term?
The domestic steel market scenario is dull and domestic prices continue to remain under pressure. Thus, mills have shifted their interest to exports over domestic sales. If the same situation persists HRC export volumes may increase in the near term.
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