Ex-India hot rolled coil (HRC) prices have risen over the past week, with major mills pushing for higher levels on the back of increasing energy costs and elevated prices of imported raw materials. Despite this upward pressure, trading activity has remained largely subdued, as buyers have held back amid ongoing uncertainties surrounding CIF (cost, insurance, and freight) contracts due to the war in the Middle East, as well as prolonged delivery timelines to European destinations. Indian mills have also largely withdrawn from offering material to the Middle East amid the ongoing conflict, further weighing on market liquidity. However, market participants report that at least two cargoes were sold to Vietnam last week and offer prices have edged up slightly again this week.
Ex-India HRC offers have been ‘notionally’ increased to $520-530/mt FOB for the Middle East, compared to $490-500/mt FOB a week ago, even though most large mills are heard not to be submitting offers in this region. “Indian mills have stopped submitting offers to the entire Middle East not only because of prices but also because no shipper is willing to accept ex-India cargoes. Shippers are quoting 200-300 percent higher freight rates even for non-Middle East cargoes. This excluding surcharges. Hence, for any buyer the FOB price offers very little guidance on the final landed price,” an affiliate of Tata Steel Limited told SteelOrbis.
“We hear some bookings from early March or late February have been declared force majeure by either the seller or the buyer. This entails a financial loss for either or both. Hence, we expect exports to remained stalled as long as the war is prolonged,” he added.
At the same time, this week ex-India HRC offers for Europe have settled at $640-650/mt CFR, up by around $25/mt week on week, which translates to around $590-600/mt FOB, versus $570/mt FOB last week. According to sources, while no bids have been received, many buyers from the region are not willing to accept alternative delivery shipping routes via the Cape of Good Hope entailing higher freight costs, quotes for which from shipping lines have also showed wide variations, resulting in the firming up of CIF-based sales contracts.
Offers for ex-India HRC in Vietnam have been estimated at around $510/mt CFR level this week for May shipment, up by $10/mt, but the market has been preparing for further hikes, according to sources. Talk about two bookings of ex-India HRC signed in Vietnam at around $500-510/mt CFR levels last week has been circulating in the market, though this information has not been confirmed by the time of publication. Furthermore, this week at least two traders said that a large eastern India-based mill has been negotiating a delivery to Vietnam at a price of around $500/mt FOB, but the challenges of finalizing a CIF-based final contract have kept the deal pending for over a week for an estimated tonnage of 15,000 mt.
Thus, the SteelOrbis reference price for ex-India HRC has settled at $490-590/mt FOB, versus $480-570/mt FOB last week.