Ex-India HRC prices stable as good mood persists locally, mills test long-term supply deals

Ex-India hot rolled coil (HRC) prices have remained unchanged over the past week as sentiment is still positive in the local market. Besides, though no deals have been reported over the past week, some large mills are heard to be pushing for long-term supply contracts.

Specifically, ex-India HRC prices have remained in the range of $590-620/mt FOB, the same as last week, with no contacts reported so far, amid most mills’ still minimal interest in export sales due to good local order books.

Sources said that the new export tariff quotas in the EU, effective from October 1, applicable for shipments from India, were exhausted over a period of two to three working days, resulting in offers failing to elicit any response. Meanwhile, at least two officials at large private mills confirmed they are starting talks on long-term supply contracts with buyers in the UAE and Europe. The talks are based on a contract clause of a two percent variation in prices during a period of three months, not linked to the price trend in the spot market. However, both officials declined to confirm the conclusion of a supply contract.

According to a steel sector analyst with a Mumbai-based financial advisory firm, better domestic prices, slow overseas demand, and lower prices quoted by main competitors have forced Indian mills not to submit spot offers.

At the same time, pushing for longer-term supply contracts with minimal price variations could be a win-win situation for both buyers and sellers. The analyst said that for the latter it would ensure more efficient export allocations and hedging of risks of a large price fall and unsold inventories, while for the buyers it would offer protection from large potential price increases or price volatility, particularly in the EU. However, the analyst was quick to add, “It is still too early to predict that long-term supply contracts can be a viable option for spot sales, unless the market shows improved price acceptance. The strategy will need to be vindicated by the conclusion of at least a few such contracts.”