Ex-India hot dip galvanized (HDG) coil prices have indicated lower levels amid weak market activity in response to Gulf buyers seeking discounts and depressed interest from the EU region belying expectations of a strong rebound, SteelOrbis learned from trade and industry circles on Thursday, June 17.
Indian integrated steel mills have been forced to adjust export HDG offer prices lower by $50/mt to the range of $1,100-1,150/mt FOB over the past week, to fall in line with lower bids from buyers in the Gulf region.
The sources said that, while demand in the Gulf region is seen to have improved compared to earlier weeks, buyers have been willing to conclude deals only at discounts on offers.
According to an official from a western Indian integrated steel mill, belying expectations, the response in the EU region to sellers’ offers has been significantly tepid. He said that, while EU demand remained strong, it is possible that higher volume offerings for the third and fourth quarters from Italian steel mills have temporarily subdued import activity.
“Buying activity from the EU is still to gain momentum, but it will set an upward trend in the third and fourth quarters, which is a positive outlook for local exporters. The Gulf market is difficult as demand is on a rebound, but buyers are still very price-sensitive,” the official said.
Another steel mill official has pointed out that current HDG prices acceptable in the Gulf market are not remunerative for sellers, considering that local hot rolled coil (HRC) prices are trending upwards and are expected to hit the $1,000/mt mark over the next few weeks and the spreads between local HRC prices and HDG FOB prices are too narrow to factor in value addition. He said that exporters are unlikely to increase export allocations unless realizations move above the $1,200-1,300/mt FOB mark.
Sources said that a Maharashtra-based steel mill has concluded a deal with a Bahrain-based trading firm for an estimated 18,000-20,000 mt at a price of around $1,100/mt FOB.