The steel exports market was very quiet for the past 20 days. Mills were in wait-and-watch mode. Almost no major trades were heard, especially in flats. The reasons are not far to seek, with both Europe and Vietnam markets dried up currently.
India’s second-biggest overseas HRC market, Vietnam, has suddenly gone cold because of a recent over 1 lakh-tonne deal clinched by Russian mills over 3-4 days. SteelMint heard that Russian mills have become very active ahead of the proposed export tax in that country from 1 Aug’21.
The deal was officially reported at 1 lakh tonnes and SteelMint heard the entire amount got sold in the Vietnam market at $855-860/tonne (t) CFR. In comparison, previous Russian HRC export prices into Vietnam were hovering around $1,000/t.
Prior to the Russian deal, prices from China into Vietnam were around $950-960/t CFR. Indian mills were targeting $20-30/t more than what the Chinese were offering, although no sales were happening. But now, a source informs, post- this lightening Russian deal, no mill is sure what price it can get in the export market now.
Sales to Europe under Eurofer scanner
Europe, which has been a lucrative market so far, currently looks bleak with quotas for the last quarter exhausted. Further, there is news that Indian mills have come under the Eurofer scanner which has sought an anti-dumping duty (AD) probe into Indian HRC imports into Europe. This development can keep exports to Europe low for the rest of the calendar.
The HRC quota of around 1.66 lakh tonnes for Apr-Jun’21 was exhausted much before the quarter closed. As of 1 Jul’21, India’s request to export HRCs to the EU amounted to 333,130 t, while the country’s tariff-free individual quota for 1 Jul-1 Sept’21 is only 169,717 t, as per EU customs data. Any volume in excess of this attracts a 25% duty on the buyer’s account. India’s exports of HRCs to Europe in Jan-Apr’21 were up 190% compared to the same period in CY’20. The new quotas from 1 Jul’21 are yet to be released.
Export prices under pressure
Export prices are under pressure. A highly placed source said export offers had climbed high, hovering at $1,100/t in mid-May. “Buyers cannot go beyond a certain point, because it will have an impact on their working capital. So, they are deferring their purchases. This was expected and the trend has set in. There is also saturation in demand,” the source revealed.
India’s finished flats exports in May’21 rose more than 27% m-o-m to 1.15 mn t against 0.90 mn t in Apr’21 were at.
Outlook
Exports are likely to stay thin in the next couple of weeks. Mills have two options. They can either wait for prices to improve. Or cut prices. They may enter the overseas market by end of next week but what prices may be fetched is difficult to guess at present.
Prices as on 9:00 IST, 05 Jul. d-o-d changes indicated against closing price of 02 July
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