Indian mills significantly increase HRC offers for EU; other markets quiet

• Indian HRC export prices for EU rise by $40-50/t w-o-w in recent deal
• Mills to announce offers for the Middle East, Turkey and Vietnam later this week

The Indian hot rolled coils (HRC) export offers spiked for the European markets against the previous deal concluded at $965-970/tonne (t) CFR a couple of weeks back.  However, other markets were quiet.

An unconfirmed deal of 10,000 t of HRCs was heard to have been booked by an Indian private mill for export to Europe at $1,020-1,025/t CFR basis, for April shipment. However, it is learned that mills are planning another significant hike of $20-40/t in the next round of offers.

Factors behind the surge in offers  

• Hike in domestic steel prices in EU: This jump in offers was on the back of increasing concerns around the rising power costs and other raw material prices such as coking coal and slabs amidst the ongoing Russia-Ukraine war. It is indicated that mills will sharply raise HRC offers anytime soon. Europe’s largest steel maker – ArcelorMittal Europe has increased HRC offers by Euro 180/t ($200) today.
• Trade-tensions impacting seaborne steel trade: Russia exported 30.30 mnt of steel in 2021, up 13% y-o-y against 26.85 mnt in 2020 while Ukraine’s steel exports last year touched 15.26 mnt, down 6% y-o-y, data maintained with SteelMint reveals. The European Union is the largest importer of Russia’s steel at 8.83 mnt in 2021, up a sharp 58% y-o-y against 5.60 mnt in the previous calendar. With the largest exposure to Russia’s exports, the EU is bound to face supply disruptions and shipment delays in steel and related raw materials.Such an eventuality will drive it to scout for other sourcing destinations“The Russia-Ukraine conflict has changed market dynamics. The EU used to buy a substantial volume of flats from CIS and this supply will be impacted. If EU needs the cargo, it will not stop at overshooting the quotas,” informed a source.
• Sufficient bookings with Indian mills: Indian mills are amply booked for March and whatever activity takes place in the upcoming month will be for April deliveries.

However, SteelMint’s India HRC export index remains pegged at $864/t FOB east coast, as there were no firm offers for the Vietnamese and Middle East markets. Few indications were heard at $920/t CFR for the Middle East market, but mills are yet to announce fresh offers.

Indian steel makers have likely held back offers in anticipation of sharp hike in the export offers of HRCs from other exporting nations. Meanwhile, market participants opine that the bid levels too might witness a significant increase amid an increase in the raw material costs and logistical barriers.

Outlook: All the major steel mills are looking at increasing HRC prices for domestic sales anytime soon this week. Market participants are anticipating mills to increase prices by around INR 2,000-2,500/t for early March sales.