The HRC export index has dropped to a nine-month low this week as mills continued to reduce their offers over lack of buying interest in the key markets. SteelMint’s India HRC (SAE1006) export index dropped to $790/t FOB east coast. Similar levels were last witnessed towards end of Mar’21. Furthermore, the offers have continued to decline for the past five consecutive weeks.
Rationale: Eleven indicative prices were considered as T2 inputs while no major export deals were reported as T1. The final price was an average of T1 and T2 inputs which stood at $790/t FOB. The CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.
Vietnamese buyers prefer domestic HRCs over imports: Vietnamese buyers continue to prefer domestic hot rolled coils (HRCs) over imported ones as the demand recovery has remained relatively slow. The concerns around the delay in delivery and rising Covid cases in most countries have weighed on interest in imported HRCs.
A few Indian mills have reduced their quotes for Vietnam with these ranging between $815-825/t CFR. However, buyers did not respond to these levels. Also, the participants are awaiting the price announcement for Feb’22 dispatches from Hoa Phat and Formosa in the upcoming week anticipating a significant cut in offers.
UAE: Buyers based in the UAE have also remained mute on inquiring about Indian HRCs in the past few weeks amid the continual decline in global HRC prices. This week, Indian mills reduced their offers further to $840-860/t CFR UAE to entice buyers. Even though the market there has resumed after the extended holidays on account of Commemoration and National Day holidays, the inquiries are yet to be heard.
Near-term outlook
It is likely that the export offers from India will remain under pressure in the near term owing to competitive offers from other exporting nations. For instance, China and Russia are offering HRCs at $810/t CFR and $760/t CFR Vietnam for Jan-Feb’22 shipments.
Meanwhile, demand in the overseas markets is likely to slow down in the upcoming weeks with the Christmas and New Year holidays approaching.
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