Indian hot rolled coil (CRC) prices have increased further to $560-570/mt FOB, up by another $20/mt over the past week. This level corresponds mainly to the tradable level in the main sales destinations, but official offers from Indian mills are rare and coming at higher levels of $575-585/mt FOB.
However, both the number of deals and booking tonnages have been severely limited amid the scarcity of material in the local market, higher margin realizations for local sales, and the resultant cutbacks in export allocations by integrated steel mills, the sources said.
It has been pointed out that, with HRC prices in China touching a two-year high, tight availability has hit key markets like Vietnam, but bids received for ex-India HRC have been either reduced in volumes or not responded to by several producers.
Sources said that no integrated steel mill had any exportable surplus for January deliveries and even smaller-tonnage bookings have been for February deliveries, resulting in several bids being rejected by sellers.
Most overseas markets have been facing shortages of supply and producers have been seeking to further push up prices and have cited reports that ArcelorMittal is seeking a HRC price of around €600/mt ex-works and, coupled with higher Chinese prices, all markets are firmly in a bull run. But despite ex-India prices seeking higher levels, exporters are still focused on local sales where opportunities of maximizing per ton realizations are higher.
Sources said that an Odisha based steel mill reported a March delivery booking of estimated 20,000 mt with an Asian buyer at $570/mt FOB. The same steel mill concluded a second modest volume March delivery contract at price of $565/mt FOB with a Singapore based trading firm. But these deals were exceptions with the majority of buyers in Vietnam not reporting any firm offers from India.
A western India-based steel mill has reported a trade for 25,000 mt with a Gulf-based trading firm for end-of-February delivery at around $570/mt FOB, the sources said.
An offer from one Indian mill has been heard at $620/mt CFR to Europe, which translates to $585/mt FOB.
Significantly, several traders said that currently strong domestic demand has eased pressures to ship overseas. But in the medium and long term, India’s share of the flat product market overseas is expected to fall sharply following the conclusion of the Regional Comprehensive Economic Partnership (RCEP) of 15 countries which India has stayed away from. Since the new trade pact will eliminate tariffs across products, higher volumes of steel are expected to flow into key Southeast Asian markets from China, Japan and South Korea. While this might not surface immediately amid strong local demand but, considering cyclical medium- and long-term price movements, India’s market share in Southeast Asian steel trade will take a hit as soon as the longs market enters a surplus zone.