- SteelMint’s India HRC export index drops to $640/t FOB
- Middle East market muted amid Eid-ul-Adah holidays
- Vietnam’s Formosa cuts prices for Aug early-Sep’22 sales, buyers stick to domestic procurement
SteelMint’s India HRC export index was recorded at $640/t FOB east coast, as against $645/t FOB assessed a week ago, a fall of $5/t w-o-w. Holidays in the Middle East and price cuts by Formosa Ha Tinh in Vietnam weighed on market sentiments in these regions. On the other hand, the Indian rupee (INR) hit a record low of 79.5 against the dollar ($) recently which may give some support to export offers.
Rationale: Seventeen indicative prices were considered as T2 inputs, while there was no export deal reported to Vietnam or the UAE to be considered as T1. The final price was an average of T1 and T2 inputs which stood at $640/t FOB. The CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.
Market-wise highlights
1. Middle East market remains muted amid holidays: The market remained mostly inactive in the key market of UAE since last Friday, amid the Eid-al-adah holidays and the Haj pilgrimage. Moreover, participants opine that market activities will pick up in the next couple of days. However, against the indicative offers of $700/t from India, some bids were received at a lower $680-690/t CFR levels.
2. Formosa Ha Tinh cuts prices sharply for Sep’22 sales in Vietnam: The Vietnamese steel major Formosa Ha Tinh steeply cut its September and early-October sales. Post-revision, the effective price of skin-pass HRC (SAE1006) stand at $655/t CIF Ho Chi Minh. However, the company had announced significant reductions in HRC prices twice for August and early-September sales, bringing offers down to $720/t CIF Ho Chi Minh City (HCMC).
A drop of 15% m-o-m in sales volumes of Hoa Phat to 560,000t in June against 660,000t in May gives a clearer picture about the demand in the country. Moreover, buyers have remained glued to domestic procurement before booking imported HRC since the beginning of CY2022.
With steep price drops announced by Formosa today, bids for imported HRCs are likely to drop further. India HRC (SAE1006, boron-added) export indications were heard at around $660/t CFR Vietnam this week against $670/t last week. Chinese HRC (SAE1006) offer are heard at $640/t CFR.
3. European demand remains subdued: The demand in the EU markets continue to remain subdued. Low steel consumption by the automobile and white goods segments amid high power costs and chip shortages has led to higher inventories with the traders in the region.
HRC export prices have continued to decline on the global platform this week, further raising concerns amongst buyers. Also, the most active Chinese SHFE HRC October contract settled today at RMB 4,009/t ($597/t), dropping by around RMB 200/t ($30/t) w-o-w.
Outlook:
The HRC export prices might continue to feel the weight of low overseas demand, and competitive prices of domestic players in certain markets. Moreover, monsoons in the Southeast Asian countries and the month-long holidays in Europe in August are likely to weigh on the export volumes, and thus on offers from Indian steel mills in July.
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