- SteelMint’s India HRC export index at $560/t FOB, up $25/t w-o-w
- Deals reported for Middle East , EU in last couple of weeks
- Major mills withdrew export offers amid limited allocations
The Indian HRC (SAE1006) export index saw a $25/t increase this week as mills started to quote higher after closing deals in the Middle East (ME) market, and the European Union (EU). SteelMint’s India HRC export index was assessed at $560/t FoB east coast, which was at $535/t FoB a week ago.
Indian mills have booked good volumes of exports in the past couple of weeks to the EU and ME.
Rationale: Twelve indicative prices were considered as T2 inputs while there were no trade deals to be considered as T1. The final price was an average of T1 and T2 inputs which stood at $560/t FOB. CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.
Why has the export index shot up?
1. Hike in Chinese HRC offers: Chinese HRC export offers edged up for the second consecutive week. HRC (SS400) export offers stood around $590/t FOB Rizhao, up from the levels of $580/t a week ago. Chinese mills have been eyeing higher offers on the back of the rally in HRC futures. Meanwhile, yesterday, China’s leading steel manufacturer, Baosteel, announced an increase of RMB 200/t ($29/t) in its domestic HRC prices for January 2023 sales.
For instance, China’s SHFE HRC (May 2023 contract) futures settled at RMB 4,025/t today, up by RMB 91/t as against RMB 3,934/t on 6 December 2022.
2. Currency appreciation keeps Japanese mill less active in exports: The currency appreciation is another major reason that has pushed up the offers from the exporting countries or even made some of them withdraw offers. For instance, $1 equated to JPY 140 around end-November but which is now hovering around JPY 136.
3. Good export volumes booked but limited allocations a challenge: Indian mills have booked good volumes in exports post-removal of the duty from 19 November, 2022. Around 50,000-60,000 t of HRCs have been booked for exports to the EU, while some volumes have been booked for Vietnam in the past couple of weeks. Also, export bookings were made to Turkey as well. These add up to a substantial volume but mills do not have a very high allocation for exports in December-January. The cargo already booked are meant for delivery in end-December or early-January, SteelMint learnt from reliable sources. Due to limited allocations, mills are now eyeing higher export offers while some have withdrawn their offers from the global platform.
Indian HRC export offers stood around $580-600/t CFR Vietnam, $605-615/t CFR UAE, and $630-640/t CFR Antwerp (EU) prior to the withdrawal.
Outlook: Indian mills are likely to resume export offers later this week. Buying inquiries from the EU remain supported on the back of restocking needs ahead of the New Year holidays. However, Middle East and Vietnam based buyers may remain less active amidst awaited price announcements from domestic players and decent bookings concluded in the past couple of weeks.
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