- SteelMint’s India HRC export index further by $50/t w-o-w
- Increased competition from Asian mills, low buying interest in Middle East weigh on offers.
- Absence of firm bids in the European market amid subdued demand.
- Appreciation of dollar against other currencies weighs on buying interest.
SteelMint’s India HRC export index dropped to $860/t FOB east coast contrasted against last week’s $910/t FOB level. A steep drop in export offers to the Middle East market weighed on the index this week.
Similar to the previous week, there are just indicative offers for exports, but hardly any transactions taking place.
“There are just market indications currently and mills are actively looking for firm bids for June shipments , but there are hardly any,” said traders.
Market-wise highlights
1. Buyers in Middle East bide their time, expecting offers to decline further: The markets in Middle East, especially the UAE, continue to wait their time out in expectation of further decline in prices. Following the downtrend since mid-April, buyers are expecting the HRC (SAE1006) offers to come down further in the coming weeks, which is weighing on the buying sentiments and trade activities. In the current week, Indian HRC offers are being heard in a wider range of $890-920/t CFR UAE in contrast with the previous week’s level of $950-980/t CFR. Meanwhile, competitive offers from China, Taiwan and South Korea stand around $890-900/t CFR levels.
2. Demand subsides in Europe, offers get held back: Indian mill have been finding it difficult to conclude deals in the European markets since early April. Buyers having trouble in opening LCs, rapidly exhausting quarterly quotas and a low demand base in the EU market at present have pushed mills to hold back offers rather than reduce them. The downstream industrial demand in the EU market is marred by high power costs, and disruption in logistics amidst the Russia-Ukraine geo-political tensions. There were a few indicative offers received for the EU market this week. Price indications remain pegged to $1,100-1,140/t CFR levels against last week. However, a few indications are also being heard at $1,150/t CFR.
3. Chinese mills steeply reduce offers to Vietnam: Steeply low offers prevailing in the Vietnamese market is the major factor keeping the Indian mills inactive in the market. The imported HRC (SAE1006) offers to Vietnam from China dropped steeply by $50-60/t this week as mills turned aggressive in booking cargoes for exports. Currently, the offers stand around $790/t CFR contrasted against last week’s levels of $840-850/t CFR. Slow demand in China’s domestic market amidst stringent lockdowns, volatile futures market, and delay in projects due to logistical constraints are among the major reasons. Also, the dollar’s appreciation recently has pushed buyers to the side lines, making mills reduce offers.
Moreover buyers in Vietnam are waiting for the domestic mills Formosa Ha Tinh and Hoa Phat to announce their prices for July and early-August sales, which are expected in the next few days.
Near-term outlook
In light of the current subdued market sentiments amidst limited buying interest, declining offers and volatilty in the Chinese futures, markets participants feel offers may move downward in the near term.
“I feel markets will be sluggish as Chinese Covid situation is hurting them, and they will continue to drop offers till the time they come back on track,” said a reliable industry participant.
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