Steel export bookings for July end shipments from India have gone down in the last two weeks. No major bookings were heard while overall deals were sporadic. More importantly, recent export tenders (Slab, Billet, HRC, Plate) from SAIL and RINL, amounting to over 100,000 tonnes (t), had few takers. The bids received were either very low bids or there were no bids at all. Traders indicated that, as a consequence, these tenders may even get cancelled.
Reasons for low exports
- Lack of availability of vessels due to the pandemic. Few foreign vessels want to touch Indian shores, under present circumstances. Freight rates have also gone up as a result of this.
- Many countries, like Vietnam and Nepal, are still facing Covid-induced lockdowns.
- European Union quotas are exhausted and are yet to be renewed.
Likely Impact
Mills had been exporting around 25% of their production, which is a considerable exposure to the global market. Low export volumes may have some impact on prices, although we do not see a major correction in the near term and prices could remain range bound.
If exports do not pick up then, Indian mills will perhaps have very limited room to increase prices. This is despite the fact that prices in India are still at a discount to landed cost of imports.
Short-term outlook
Globally, there are indications of pent-up demand. User-industries / mills had not been able to stock up adequately because of Covid lockdowns. Some are even running out of stocks, it’s been heard.
Notwithstanding that, there is still no clarity on when exports will pick up. It could be 15 days to a month before sentiments improve, some market experts opine. Exporters are also not very sure whether they would be able to arrange vessels in the near term and that too at viable rates.
Prices as on 8:40 IST, 7th June. d-o-d changes indicated against closing price of 04th June
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