After previous increases, during the past week Indian hot dip galvanized (HDG) coil exporters’ offers have remained stable at $725/mt FOB, but the strengthening Indian currency has continued to dampen shipment volumes and outlook, traders said on Thursday, August 10.
“The general strengthening of the Indian rupee against the US dollar has put Indian HDG exporters in a bind,” a Mumbai-based trader said.
“Having increased offers earlier in the month, exporters are not capable of offsetting the erosion in value caused by the rising rupee,” the trader said. “Our reports indicate that Chinese steel mills are aggressively pushing up ex-China HDG offers even though shipment volumes are thinning. However, Indian exporters cannot risk another round of revisions in offers because transaction volumes have already thinned out” the trader added.
The Indian rupee appreciated to INR 63.50 to the dollar during the past week and, despite it dipping to INR 63.79 to the dollar thereafter, traders said that the medium-term trend indicates that the currency could breach the INR 63 to the dollar mark given the strong inflow of dollars into the equities market.
According to one trader, US flat product steel prices are seen to be consolidating after hikes announced by US steel mills earlier in the month and imports are poised to rise. But Indian HDG exporters unlike their Chinese counterparts are not well positioned to seize the opportunity to push higher volumes as they are under pressure from the appreciating Indian currency, the trader said.