After a complete lull of 2-3 weeks because of disparity in bids and offers from end-users, activity returned to the export market towards the end of last week. Some HRC export deals are being finalised to Vietnam and Turkey, albeit at lower prices.
A private mill concluded a 30,000 tonnes (t) deal to Vietnam, at $915/t CFR, or equivalent to $875-880/t FOB India.
In another deal, one parcel was also reported sold to Turkey at below $950/t CFR levels.
Another leading flat steel manufacturer was also heard offering HRCs to Vietnam but at a higher $920-925 CFR. The mill is expected to further book quantities this week because it feels: “Global prices are expected to remain supported because of China’s rising futures.”
The above bookings are Aug’21 shipments.
“A couple of weeks back, Indian mills were offering $960-970/t CFR but Vietnam mills were bidding even lower. The Indian domestic scenario was dull then, while Vietnam, facing lockdowns and a weak domestic market, was also under pressure to sell overseas. So, all mills lowered their offers which are currently ruling at $920-930/t CFR.
While mills are still dispatching some old bookings to Europe, no new deals are being struck because of the exhausted quotas. But Turkey, Vietnam and even North America have opened up although the last is not a high-volumes destination.
“Those mills which had HRC inventory are selling at lowered prices, others are not. But some export deals are being struck which has lifted sentiments. Therefore, chances of further corrections are slim in the remaining quarter,” said another source.
Why will HRC prices remain supported?
Hot rolled coil (HRC) prices from India have limited room of falling further, at least for the current quarter, lifted by slightly more bullish export and domestic markets. The trend is being supported by rising Chinese futures and production cuts.
- JSW Steel maintenance shutdown: The steel melting shop of steel behemoth JSW Steel’s flagship Vijayanagar works will go into maintenance shutdown from 15 Jul’21 for around 75 days. Although the mill’s export orders will not be impacted, not too many fresh offers will be available, which may create a supply crunch, both in terms of domestic and overseas sales.
- Domestic market rebound expected: However, one source said, all mills are not under pressure to export at lowered prices since they feel the domestic market is going to rebound soon with pent-up demand. With lockdowns easing, auto dealers are back in business and OEMs are also back to manufacturing at their optimum levels, which will support higher HRC prices.
Domestic prices corrected by a further INR 1,500-2,000/t last week with the benchmark 2.5-mm, down to INR 64,500-65,500/t, ex-Mumbai, against INR 66,000-67,000/t seen in the previous week.
Outlook
Chinese steel futures have risen around $50-60/t in the last one week, a trend that should pull up HRC spot prices globally and in India too.
Further, China has advised its mills to keep total production for CY’21 at last year’s levels, which means they will have to produce around 75 million tonnes less in H2. Going forward, this should also support Indian HRC export prices.
Prices as on 9:05 IST, 13 Jul. d-o-d changes indicated against closing price of 12 July
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