Indian exporters of hot dip galvanized (HDG) coils have maintained their offers unchanged at $740/mt FOB during the past week, while transaction volumes have been negligible as lower offers sought by US buyers have been rejected and also due to the logjam over local taxes in India, traders said on Thursday, September 21.
Market sources said that the narrowing of the difference between imported HDG prices and US domestic flat product prices prompted US steel importers to seek a lowering of Indian offers but this was turned down by Indian exporters.
Recent price hikes by US steel mills did not seem to be holding and US steel distributors were seen to be postponing fresh import bookings unless they were able to secure significant discounts, the sources said.
At least two other traders said that the process of “paying the tax now on export shipments and getting the refund later” under India’s newly-effected Goods and Services Tax has also negatively impacted the export business in general.
The traders said that most commercial exporters are staying away from export shipments as the stipulation of first paying the tax and then claiming refunds has threatened to lock up significant working capital of small and medium-sized commercial exporters.
“I feel the HDG export business will remain at a low key over the next few weeks. The government is reportedly looking into issues faced by exporters. It is likely that the government will also intervene, seeking a lower exchange rate against the US dollar to make exports more competitive” a Mumbai-based trader said.
“The market will await announcements from the government before making any adjustments to HDG offer levels and pushing volumes” he added.