Ex-India hot dip galvanized (HDG) coil prices have been kept stable over the past week but trade has fallen silent after even discounted offers failed to attract buyers anticipating a price correction triggered by higher trade flows in key destinations, SteelOrbis learned from trade and industry circles on Thursday, June 25.
Sources said that ex-India HDG (grade Z120) is unchanged at $780-790/mt FOB, but discounted offers at $750-760/mt FOB did not elicit any buying.
According to the sources, at least two large mills are reported to have called off negotiations in the Gulf market on offers ranging at around $760-770/mt net of discount, after buyers decided to defer any deals. This, the sources said, could be attributed to the anticipation that, with more sellers active in pushing sales at more competitive prices, an overall correction in prices would be triggered.
However, a western India-based exclusive flat product producer reported a sale to its affiliate in Europe for end-of-July shipment, but no price was disclosed as this sale was treated at a “transfer price to a related party”, the sources said.
“Trade flows are rising but not prices, translating to higher competition for Indian sellers, particularly in the Gulf Cooperation Council (GCC) region. In our assessment, discounted sales will not be sustainable below the $770/mt FOB mark, because of rising energy costs,” an Indian source said.
“A section of industry is expecting cost pressures including energy prices to ease following the peace deal in the Gulf. However, our assessment is contrarian. Indian energy prices react to falls in global energy prices with a big time lag. Hence, inflationary pressures will be sustained for some more months. This will hamper mills from entering export markets with aggressive pricing that is expected to emerge with higher trade flows. At best, export volumes will remain at a very low level,” he added.
