Indian flat steel exporters, particularly large domestic steel mills, have continued to push higher volumes overseas through aggressive pricing aimed at reducing inventories as the current fiscal year draws to a close, traders said on Monday, February 25.
“Most large steel mills as well as commercial exporters have aggressively cut export offers during the past week to improve transaction volumes,” a Mumbai-based trader said.
“Although reports received in the market have indicated a rise in the number of contracts for ex-India flat steel products to key markets in Indonesia, Vietnam, Malaysia and neighboring markets like Bangladesh, the average per contract volume did not see as significant a rise as expected due to the sharp reduction in offers,” the trader added.
However, a section of the market has maintained that the increase in exports of ex-India flat products is unlikely to be sustained in view of the Indian rupee appreciating against the US dollar and as the mills are unlikely to be able to sustain lower export margins for long.
Ex-Indian offers for hot rolled coil (HRC) have been drastically pruned by $30/mt week on week to $500/mt FOB, according to market sources.
The sources said that, while domestic steel mills are increasing local base prices for flat products, they are aggressively pricing export offers, indicating an attempt to liquidate stocks through exports while maximizing domestic sales margins due to increased demand from Indian end-users.
Steel Authority of India Limited (SAIL) is shown as an example which during the past week floated an export tender for 8,000 mt of HRC for March delivery, while reports indicate that SAIL will increase its local base prices in the current week.
Market reports suggest that the total contracted HRC export volume during the past week was around 10,000-12,000 mt, mostly accounted for by large steel mills.
Ex-India cold rolled coil (CRC) offers have decreased by $15/mt during the past week to $540/mt FOB, according to market sources.
The sources state that the estimated volume contracted by large steel mills was around 8,000-10,000 mt, largely for March deliveries to Indonesia and Vietnam, with some small volume to be shipped to neighboring Bangladesh.
Commercial traders have largely been absent from concluding significant contracts, which the sources attributed to the Indian currency appreciating against the US dollar over the past few days.
According to market sources, ex-India plates offer have moved down by $20/mt week on week to $580/mt FOB, with no significant transactions reported in the market during the past week.