Indian mills seal fresh 50,000 t billets export deals; more to follow

Things are looking up for steel mills once again, at least on the billets exports front. A couple of more large billets exports deals, with a combined volume of around 50,000 tonnes (t), were sealed this week by private mills, SteelMint learnt from reliable sources.

Importantly, these deals have been struck at prices $15-20/t higher than those concluded a few days back. It may be noted that last week Indian mills booked over 100,000 t billets, excluding deals made for Nepal.

The deals

• An Indian mill booked a 30-kilo tonne (kt) billets parcel to China at $700-705/t CFR, equivalent to $615-620/t FoB for August shipments.
• Another player is heard to have concluded its deal to China at $620/t FoB for 20 kt.

A few days back, private Indian steel mills were offering billets at $680-690/t CFR to South East Asia and China, higher by $5-10/t from the previous week.

Clearly, the present bookings are fetching higher realisations and the Indian mills are only too happy to export with domestic demand dull and the larger mills still high on inventory.

Why are export prices gaining traction?

• Rising steel futures: The reason for the higher prices is, of course, the strong Chinese steel futures, which have been gaining consistently for well over a week. Rebar futures had been rising again consistently since 25 Jun’21. From RMB 5,066/t ($791/t) on 25 Jun these touched RMB 5,580/t ($871/t) on 13 Jul’21. High future are also positively impacting spot trading, which is only benefitting Indian mills.
• China’s production curbs: Demand for billets is high in China at present on account of the strictly enforced production cuts. The curbs aim to keep crude steel production at CY’20’s levels of around 1 billion tonnes. China’s daily steel output averaged 3.13 mn t over Jan-May’21, up 14.7% y-o-y. Production in H2 needs to be cut easily by more than 50 mn t. Local production cuts mean the Chinese mills will need to source semis from overseas. They are thus active in stocking up before the rainy season ends, when construction will resume.

Outlook

July is expected to be sluggish for Indian mills, all the more reason they would be scouting for export deals of Aug-Sept shipments. And, perhaps, China is the answer since more deals are expected soon, say traders.

India’s billet exports recorded a massive jump from 2.86 mn t in FY’20 to 7.25 mn t in FY’21. Out of 7.25 mn t exported in FY’21, China occupied a share of 45%, followed by Nepal and Indonesia with 15% and 8% respectively.

Prices as on 9:05 IST, 15 Jul. d-o-d changes indicated against closing price of 14 July