Ex-India hot dip galvanized (HDG) coil prices have continued to surge unabated amid aggravated shortages in the EU, but trading volumes have been limited owing to end-of-year considerations of local Indian integrated steel mills and the exhaustion of the quota for European buyers, SteelOrbis has learned from trade and industry circles on Thursday, March 25.
Sources said that offers have been seen to be consolidating firmly in the range of $950-1,020/mt FOB compared to $890-1,000/mt FOB a week ago. Most of the limited trades were reported at slightly below the $1,000/mt mark, at around $975-990/mt FOB.
According to sources from the sellers’ side, the allocation of hot rolled coil (HRC) for conversion to HDG and exports for the new fiscal year are still being finalised by integrated steel mills, and so they are not in a hurry to sell HDG in the export market. From the buyers’ side, despite the shortage of material in the key EU market and limited ex-China offers in Asia, high freight rates have been pushing up prices on CFR basis and instilling caution as regards booking large volumes, particularly with several EU countries announcing stricter lockdowns amid the new wave of the pandemic.
“As per our assessment, ex-India HDG prices still have a significant upside potential. EU steel producers have reportedly hiked base prices twice in March. Local HRC prices in northern Europe are far above the $1,000/mt ex-works mark. Hence, the spread between the landed price on CFR basis of ex-India HDG even at current levels and local HRC is narrow, offering Indian integrated steel mills the possibility to continue seeking higher bids,” an official at an Indian producer said.
“We are not too sure how much improvement can be achieved by Indian integrated steel mills in increasing volume shipments overseas. Domestic HRC demand will remain strong despite short-term weaknesses. HDG exports will become a strategic option for local steel mills in balancing variable local demand,” he added.
Sources said that a western India-based steel mill has reported a trade with a Rotterdam-based trading firm at below $1,000/mt FOB for May shipment, but the final price has not been disclosed by the time of publication.
An eastern India-based steel mill has reported a trade at around $980-990/mt FOB, the sources added.