Indian exporters of hot dip galvanized (HDG) coil have maintained their offers unchanged during the past week at $750/mt FOB but market activity has almost come to a halt after the Indian currency hit a 20-month high against the US dollar, traders said on Thursday, April 27.
"The appreciation of the Indian rupee against the US dollar has been impacting HDG exports for some weeks. However, with the rupee touching a 20-month high and the currency markets expecting it to strengthen further to levels of above INR 63 to the dollar, Indian exporters are unwilling to conclude transactions as their margins would be close to negative at the current exchange rate," a Mumbai-based trader said.
"The hopes of an export-led growth and a revival of large domestic steel companies have been nipped in the bud by the appreciating rupee," the trader added.
Several traders said that the Indian government perceives the strength of the rupee as the strength of the economy, and is ignoring the reality of the currency's importance in commodity trade and in competiveness particularly against Chinese steel products.
Chinese steel export offer prices are down by an average $20-40/mt, while Indian HDG exporters, having already hiked their offers twice during the past one-and-a-half months, do not have any further leeway to offset the currency appreciation, as they have already been priced out of the market.