Indian export offers for hot dip galvanized (HDG) coils have remained unchanged during the past week in the range of $625-635/mt FOB in an inactive market as overseas buyers are still not showing interest in purchases and Indian exporters have been hamstrung by the appreciating local currency, traders said on Thursday, October 6.
“Subdued HDG prices in the US are keeping buyers away. Reports received from our buyers in the US indicate that sentiment has also been impacted by news that the US Department of Commerce has decided to have another look at existing countervailing duties on flat product imports from some countries and this has created uncertainty among buyers,” a Mumbai-based trader said.
“To worsen the mood, the Indian rupee is showing a bias towards appreciation against the dollar and Indian exporters do not have a window to adjust offers to push volumes. No exporter is expected to consider such adjustments unless the Indian currency weakens beyond the INR 67 to the dollar mark,” the trader added.
Even though the Indian rupee has weakened to around INR 66.56 to the dollar after touching a three-week high of INR 66.46 during the week, currency dealers forecast that the rupee is expected to strengthen in the short term.
Traders stated that the currency market has ignored the Reserve Bank of India’s cut in interest rates this week and dollar inflow has continued to remain strong, providing support for the Indian currency.
At least two traders said that large steel mills involved in direct exports are in no hurry to lower HDG offers to push volumes overseas against the backdrop of strong domestic demand.
However, the two traders added that the option of INR 20-30/mt adjustments would be on the cards only if the Indian rupee slumps below the INR 67.50 to the dollar mark, depending on the US Federal Reserve’s stand on the issue of hiking interest rates.
$1 = 66.68 INR