Indian mills have raised their rebar export offers. SteelMint has learnt from reliable sources, now, it is steel major Jindal Steel & Power (JSPL) that has recently booked rebar export consignments of around 75,000 tonnes close on the heels of another steel conglomerate, JSW Steel, having made similar bookings of 75,000 tonnes around 10 days back.
Export offers up
Interestingly, now, the mills have raised their export offers (currently at $650/t cfr level) on active bookings fuelled by demand overseas.
Around 150,000 tonnes of rebar cargoes have been booked in the last 10-15 days at a price level ranging across $620-630 cfr ($590-600/tonne fob). All the shipments are headed for Singapore and Hong Kong.
It may be recalled that around two weeks back the prices were a bit depressed at $580-590/tonne compared to the rates being offered in the domestic market. Mid-February BF-grade retail rebar prices (12-32 mm) were hovering around INR 49,000/tonne which translated into a higher $680 FoR Mumbai, excluding the 18% GST. But still the mills went ahead at such rates, goaded by a depressed domestic market.
Reasons for exports
There are mainly three reasons behind the interest in exports. One is that global prices of billets and scrap are showing a northward trajectory.
Where scrap is concerned, global prices are increasing on supply shortage and freight rate hikes on less availability of vessels. Moreover, overseas end-users are accepting the material at increased offers from India mills.
Benchmark Turkey’s imported ferrous scrap prices have been rising since the second week of February. As per SteelMint data, from a low of $393/tonne cfr, prices have risen to $442/tonne cfr as on February 24, a more than 12% gain in under less than 20 days.
Secondly, post-the Chinese New Year (CNY) holidays, Chinese futures are climbing up, inducing some buying interest from China for billets. In fact, Chinese domestic billets prices have rallied post-the CNY holidays to nine-year high levels due to production curbs. Towards the end of calendar 2020, it was reported that China’s Ministry of Industry and Information Technology (MIIT) had said that, as part of the low-carbon initiatives under the country’s 14th five-year economic plan for 2021-25, its steel industry must reduce its crude steel production in 2021.
Chinese domestic billets prices, ex-Tangshan, have gained in the short term from RMB 3,800/tonne (including 13% VAT) on January 8 to RMB 4,140/tonne around mid-February as construction activities revived post-the CNY break.
Thirdly, Indian mills are still under pressure from subdued domestic prices and demand and need to liquidate some of their inventory. The Indian government’s recent order, allowing secondary mills to participate in highway construction projects, implies that primary mills’ share in such projects could likely see a drop. The notification is also putting pressure on domestic prices.
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