Ex-India hot dip galvanized (HDG) coil prices have continued to be maintained at higher levels over the past week, riding on tight local supplies of flat products for conversion. However, export pessimism has been mounting amid reports of at least one booking from the previous week for delivery to the Middle East being cancelled owing to war-related risks.
Sources said that large mills have kept ex-India HDG (grade Z120) prices stable in the range of $710-745/mt FOB but, with demand from key destinations in the Middle East coming to a complete halt, large local mills are seeking alternative outlets in East Asia, but no confirmation has been available of any success on this front.
Several sources in trade circles have confirmed that at least one sales contract concluded in the earlier week for delivery to the UAE has been cancelled. The contract was reopened for re-negotiation following the outbreak of war in the Middle East and the changed security environment, but the contract was cancelled as no agreement could be reached between the buyer and seller on revised terms factoring in the higher risk-related charges for freight and insurance premiums.
This, the sources said, has deepened pessimism regarding exports to key destinations in the region and few large mills have commenced scouting for alternative sales outlets in East Asia. At least one mill is heard to have started sales negotiations with trading firms in Singapore, but no confirmation has been available of its success.
“The war in West Asia has thrown up near impossible challenges to both buyers and sellers. Even un-executed sales contracts have become unviable owing to war risks in Middle East trading. Re-negotiations are proving to be unviable for both sellers and buyers,” an affiliate of Tata Steel Limited told SteelOrbis.
“While a few mills are looking at alternative markets in East Asia, opening such new markets is not for the short and medium term, in the case of the war being prolonged. The only positive is that most local mills do not have much HDG export allocation at the close of the current fiscal and can wait and watch how the risk profile of international trade changes going forward,” he added.
