Indian flat steel import activity has continued to remain at very low levels during the past week despite the softening of ex-China offers, largely owing to local Indian hot rolled coil (HRC) prices falling and remaining at a 36-month low, offering no incentive for imports.
According to traders, ex-China HRC offers have fallen by another $10/mt to $420-430/mt CFR Mumbai, but even this has failed to trigger much bookings by Indian end-users.
The traders pointed out that the landed price of imported ex-China HRC inclusive of all import duties and applicable anti-dumping (AD) duties is in the range of $470-480/mt CFR. Compared to this, local HRC at a three year-low is currently at around INR 34,250/mt ($483/mt) ex-works, at the exchange rate of INR 70.80 to the US dollar. The narrow differential between the landed price of imports plus AD duties and domestic HRC prices has not offered any competitive advantage to end-users to ship in imports.
At the same time, it has been pointed out that Indian steel mills are offering across-the-board discounts in the range of $10-15/mt, making local HRC more attractive vis-à-vis imports at a time when domestic demand has continued to remain sluggish and end-users are keen on limiting inventories, the traders said.
“While local HRC prices at a recent low is a disincentive for imports, there is a lot of uncertainty over the Indian government’s reported possible move to impose additional across-the-board tariff barriers on imports or lower the threshold price applicable for imposition of the existing AD rates. This is also keeping end-users away from making fresh bookings,” a Mumbai-based trader said.
“There are also expectations in the local market that Chinese export prices will move up amid lower production during the winter months and forecasts that finished steel prices in most markets have bottomed out. But low domestic demand among end-user industries is preventing any rush to beat such an anticipated increase in import offers,” the trader added.