Indian exports of hot rolled coil (HRC) have witnessed slight revival after coming to a near halt earlier, although at sharply lower prices as Indian mills attempt a dual overseas marketing strategy of absorbing the recent imposition of the export tax or negotiating with buyers to ship an alloy version of the product exempted from the new levy, SteelOrbis has learned from trade and industry circles.
Sources said that, even though aggregate trade volumes over the past week have remained very low, the very revival of trading activity is seen as a positive achievement by exporting mills.
The tradable price level for ex-India HRC of 2.5 mm and above is at $730-780/mt FOB, with the midpoint at $755/mt FOB. The higher end of the range has been lowered by $20/mt since late last week mainly due to a lack of offers to Europe. Some deals have been rumored at the lower end of the range, which is $10/mt below that seen late last week when the range was $740-800/mt FOB.
It is also pointed out that mills have been able to conclude deals after testing various destination markets with offers of boron-added alloy HRC, exempted from the levy of the export tax.
However, alloy HRC does not find acceptability in all destinations as some end-users do not need the extra ‘hardenability’ of the product for their manufacturing process.
Indian mills, which do not generally produce alloy HRC for domestic sales, are doing trial production for the export market to maintain a market presence through this tax-exempted product category, sources said.
“We are hearing a lot of noise of Indian steel players attempting to push alloy HRC to get around the export tax. But this is completely uncharted territory for Indian exporters in contrast to sellers from China who have greater experience in this product category,” an official at a government mill said.
“It needs to be noted that alloy and non-alloy products have different usages and properties under heat treatment processes. Differing ductility can be an issue in different value-added processing of the steel product. The two product categories are not completely fungible. So, we cannot predict the success or otherwise of all the noise we hear,” he said.
In Vietnam, a fresh offer of ex-India boron-added HRC has been reported at $745/mt CFR, down from a deal heard at $748/mt CFR a week ago. But this new offer, the same as a previous contract rumored in the market from India, is from a trader for a position cargo, while mills are not ready to provide such low prices for far.
A Mumbai-based steel distributor said that, irrespective of the debate over alloy versus non-alloy HRC, any sale below $750/mt FOB from mills can be assumed to result in almost no profit or even a loss for the seller.
However, with pressure from a slowdown in stock movements in the local market and the necessity of maintaining shares in major markets in the Gulf and the EU, mills are resorting to small-volume deals through aggressive pricing.
A deal for boron-added Indian HRC was heard by an eastern region mill with a Gulf buyer at around $730-740/mt FOB, much lower than a similar deal earlier in the month reported at $770-780/mt FOB.
