Ex-India hot dip galvanized (HDG) prices have been pushed up again over the past week by large mills citing rising input and energy costs, but volatile freight and insurance costs for sales to the Middle East or sales transiting the region have continued to stall trades, SteelOrbis learned from trade and industry circles on Thursday, March 19.
Sources said that ex-India HDG (grade Z120) prices have increased by $10/mt on average to $720-755/mt FOB, aimed at offsetting tight supply and rising natural gas and energy costs. However, buyers have remained out of the market, as finalizing CIF (cost, insurance, and freight)-based contracts continues to be the biggest challenge in concluding deals.
Large mills are forced to raise prices due to disruptions in natural gas supplies and higher costs after the government began regulating distribution amid the war in the Middle East. Several major mills are also reducing captive conversion.
“Natural gas is the prime energy needed to maintain the temperatures of ‘zinc baths’. Supplies are tight and prices very high to keep baths operational. Some zinc furnaces use waste heat, but several integrated mills do not generate adequate waste heat to meet their entire energy requirements. So, even production costs of limited volumes have gone up and are being passed on to all consumers,” an official at a large mill explained.
The recent cancellations of concluded contracts after buyers claimed force majeure, leading to financial losses for both buyers and sellers, have continued to cast pessimism on trade and few are willing to risk new bookings, a trader said.
