Ex-India hot dip galvanized (HDG) coil prices have been reduced but this has still been insufficient to drive sales, barring stray deals, as bids have continued to be lower with buyers in the Middle East and Europe maintaining a cautious stance, SteelOrbis learned from trade and industry circles on Thursday, April 25.
Sources said that ex-India HDG (Z120) prices have been cut by an average of $10/mt by large mills to the range of $770-790/mt FOB, but bids reported by sellers have ranged at around $750-760/mt FOB and are considered too low, with almost negative margins compared to local prices for hot rolled coils (HRC).
Sources said that a deal for 10,000 mt has been reported by a western India-based exclusive flat steel producer at $830/mt CFR Antwerp for late May delivery. Besides, according to market chatter among traders, another integrated mill is reported to be negotiating a trade for 8,000 mt with buyers in Italy in the price range of $810-830/mt CFR, but there has been no confirmation of a final deal.
“We think that some mills may be dropping prices only because trade activity is very low and some low-priced deals are being pushed to maintain a market presence in Europe by some sellers, anticipating that the current stability will lead to an uptrend. However, large local mills do not have much export allocations of HDG for overseas sales as HRC prices and local sales are very strong and downstream value addition is not offering a viable price,” a source at ArcelorMittal Nippon Steel Limited told SteelOrbis.
“Our cost-price analysis shows that any realization below $830-850/mt on FOB basis does not cover the cost of value addition in the case of HDG, taking into account the minimum cost of inputs like zinc at current prices. Hence, if deals are being made below that, it generally is taken as marketing costs to maintain a presence in key destinations,” another source said.