Ex-India hot dipped galvanized (HDG) coil prices were maintained, but the pressure started to rise amid inactive market conditions, and offers to emerging demand from select regions in Africa could not be converted to firm trades owing to issues of opening of letters of credit, SteelOrbis learned from trade and industry circles on Thursday.
Indian mills maintained offers in the range of $870-890/mt FOB but no trades from key destinations in the Gulf and EU were reported with buyers not responding, expecting softening of current price levels. The tradable level from the buyers’ side should be below $840-850/mt FOB.
According to sources in trade circles, at least two local mills commenced follow up negotiations on offers submitted to buyers in Egypt and Nigeria, two of the emerging markets, but parties were unable to conclude deals over unresolved issue of opening irrevocable letters of credit.
It is speculated that buying entities faced issues of submitting full disclosures on risks of the trades to their banks leading to failure opening letters of credit.
The SteelOrbis reference price was lowered by $15/mt over the week to $840-880/mt FOB.
“African countries are the emerging market for Indian HDG sellers. Buying entities are also exploring India based sourcing. Problem with opening LCs will be short-lived and is expected to be settled before firm trades are possible,” an official with a private mill said.
“As for buyers in Gulf, forecast of further declines in price levels are keeping them away. With domestic markets buoyant for most flat products, local sellers can wait for right price realizations,” he said.