Ex-India hot dip galvanized (HDG) coil prices have mostly been kept stable, but trade activity has fallen silent amid the combination of the widening of the bid-offer gap and negligible export allocations available, with local Indian mills and distributors in Europe yet to commit to imports.
Sources said that ex-India HDG (Z120) prices are stable in the range of $770-790/mt FOB, but even stray deals have dried up as the bids received have not exceeded $750/mt FOB and local mills find current levels unviable and they do not compensate them for the higher levels of value addition compared to hot rolled coils (HRC).
They said that the price differential between local HRC and ex-India prices is marginal and not an incentive for exports. At the same time, buyers in the EU are not showing interest in imports and have been keeping a close watch on local mills’ attempts to push up prices, which they feel cannot be sustained. Offers for ex-India HDG have been voiced at around $840/mt CFR, which translates to around $790/mt FOB. However, according to market insiders, several offers for Indian materials have already been reported at slightly higher levels at $850/mt CFR this week.
“Considering that margins from local sales of HRC are improving gradually, large mills are not allocating HDG for export as conversion is not viable,” a source at ArcelorMittal Nippon Steel Limited said.
“We hear mills in Europe are attempting to increase flat product prices. But these prices need to stabilize before distributors there look at the benefits of restocking imported materials. Our assessment is that HDG prices need to recover to levels of $800/mt FOB for local mills to return to the export trade,” another source told SteelOrbis.