Indian flat steel export offers have been kept largely stable during the past week, except for hot rolled coil (HRC) prices which have increased, but export contracts have virtually dried up with no significant transaction volumes reported in the market owing to tax issues, traders said on Monday, February 11.
The traders said that the market activity has been hit as a large amount of refunds from the Integrated Goods and Service Tax (IGST) has piled up and commercial exporters have been unwilling to risk more funds getting locked up and hence they have generally stayed away from pushing transactions even amid tepid buying interest.
The traders pointed out that the IGST is payable at the time of concluding an export contract and that this is factored into the export price, but exporters are entitled to claim refunds on the IGST amount from the government on the submission of shipping bills, which are recognized as a refund claim on the tax already paid.
However, a big backlog has piled up and exporters’ refunds have been delayed and, accordingly, a large number of medium-size and small-scale exporters have funds locked up and have been slowing down fresh transaction, sources said, adding that this could also be the cause of Indian steel exports falling by 20 percent year on year in January this year.
Ex-India HRC offers
Ex-Indian hot rolled coil (HRC) offers have been increased by commercial exporters during the past week by $20/mt to $515/mt FOB, according to market sources.
However, the sources said that the hike in offers is largely notional in the absence of any significant buying interest and both commercial traders as well as large domestic steel mills have remained out of the export market.
Even the usual small-volume export contracts to neighboring countries have not been reported in the market during the past week.
Ex-India CRC offers
According to market sources, ex-Indian cold rolled coil (CRC) export offers have moved sideways during the past week at $540/mt FOB.
However, no significant transaction by any commercial exporter has been reported in the market, although market reports suggest that certain end-users in automobile manufacturing concluded a few transactions, although no information on transaction volumes has been readily available from market sources.
Ex-India plate offers
Ex-Indian steel plate offers have also remained stable during the past week at $590/mt FOB with no transactions reported in the market, according to market sources.