Ex-India hot dip galvanized (HDG) coil prices remained stable last week with trade activity falling silent as buyers and sellers assessed the impact of the recently announced safeguard quotas for the coming quarter, while buyers from the Middle East also remained on the sidelines awaiting a new pricing direction, SteelOrbis learned from trade and industry circles.
Sources said that ex-India HDG (grade Z120) prices were maintained in the range of $700-720/mt FOB but deals differed owing to the divergence in assessing the impact of the safeguard quotas announced by the European Commission (EC).
Assessing the impact of the measures announced by the EC would have a big bearing on large mills while they decided on firming up export allocations for the April-June quarter. They said that, while India would remain a “relatively smaller player” in Europe in terms of HDG sales volumes, the new safeguard quotas will nonetheless change the sales dynamics in the region from next month. However, views on the direction of the possible changes differed among local market participants.
According to a steel sector analyst at a Mumbai-based financial services firm, even despite the fall in quotas fixed both in terms of aggregate imports and country-specific supplies, Indian exporters will face a stiffer challenge to get a share of incremental spillover demand not met by major supplying countries like Vietnam, Japan and Turkey.
“Indian mills will need to be more price-competitive to be able to meet incremental demand in an even more challenging market. Our assessment is that local exporting mills will be very conservative in fixing export allocations for the next quarter because they have little leeway in terms of pricing,” he said.
However, sources at Tata Steel Limited said that the new safeguard quotas were unlikely to make a very big material change for Indian exporters. They said that India’s market share will be determined by the demand rebound in key major economies and achievable sales volumes will be related to pricing power.
According to sources, in the coming quarter ex-India HDG prices are likely to face downside risks in the range of $20-30/mt for any seller, making export allocations for Europe likely to be lower than in the immediate previous quarters.
As of the last update for the EU quotas on March 14, India had used 100 percent of its total quota (53,047 mt) for HDG (category A) for the January-March period, while suppliers from India of HDG (category B) used only 11.53 percent of a total of 149,231 mt, according to the SteelOrbis EU quota tracking system.