Sentiment in the Indian hot dip galvanized (HDG) market has become upbeat after the New Year holiday in terms of enquiries trickling in from Europe and higher offers being submitted, but this was not reflected in firm trades materializing amid differences on CFR pricing and possible extended delivery timelines.
Sources said that Indian mills are submitting offers in the range of $830-875/mt on FOB basis compared to $830-870/mt FOB before the winter holiday season, but buyers and sellers have been unable to conclude deals factoring in freight rates which are rising and are volatile along the maritime route to the EU region through the Red Sea.
Several sources at mills and in trade circles said that neither buyers nor sellers have been able to determine CFR basis prices as freight forwarding agents are offering “multiple rates which are highly volatile on a daily basis”. They said that CFR prices including other costs like insurance have been quoted at above $950/mt for western European ports like Antwerp and Rotterdam, deterring buyers from concluding deals.
At the same time, some shipping lines are offering shipments via the Cape of Good Hope, around South Africa, from India’s west coast to ports in western Europe, entailing even higher freight rates and extending the delivery timeline by 20-25 days.
“Business activity in the EU is starting up gradually and enquiries received have also been improving over the past few days. But this positive is not getting translated into actual trades amid maritime security risks and their impact on the cost of international trade. Some carriers are avoiding the route along the Red Sea and Suez Canal from India’s west coast to Europe, while a few others are still using the route and this has increased volatility in freight rates. Some shipping lines are quoting 150-200 percent higher freight rates. This is making contract finalization between buyers and sellers extremely challenging,” a source at Tata Steel Limited told SteelOrbis.
