Ex-India hot rolled coil (HRC) prices have been kept stable but large mills have held back from concluding deals focusing instead on domestic sales which have offered better realizations than export sales. However, most market insiders estimate that current demand is still slower than initially expected and most believe it will slow down further as the monsoon season is about to start by the end of this month.
Sources said that ex-India HRC prices are unchanged at $550-600/mt FOB, but bids have been largely reported at the lower end of the range, prompting large mills to vacate the export market, resulting in no confirmed trades being reported during the past week.
According to sources, this week ex-India HRC in Vietnam has been offered at around $580-585/mt CFR, while Indian offers to Europe have been heard at around $655/mt CFR. Meanwhile, indicative offers for ex-India HRC in the Middle East have been assessed at $600-620/mt CFR. “Local Indian mills are looking for orders in the international market at reasonable prices for HRC, from $565/mt FOB to $585/mt FOB, depending on the destination and product mix,” an international trader told SteelOrbis, adding, “Sentiment has been worsening in the local market in India since during the monsoon period the construction sector slows down, resulting in lower demand for rebar and other products, including HRC, and so local steel prices are likely to decrease next month, putting pressure on export prices as well.”
At the same time, sources believe that there are mounting competitive pressures in most key destinations and that Indian mills will need to adopt aggressive pricing to enter the export markets and to be able to conclude deals successfully. But fortunately given the still rather strong domestic sales, they do not need to be aggressive in selling overseas, sacrificing margins.
“Higher prices are not being sustained in any of the traditional ex-India markets. In Europe, mills attempted to increase prices but faced market resistance and this will further delay interest in imports. We do not see large local mills allocating significant volumes to exports at a time when domestic supplies will keep tightening,” a source at Tata Steel Limited told SteelOrbis.