In one of the most aggressive moves in recent times, Indian integrated steel mills have increased hot dip galvanized coil (HDG) prices by around $100/mt during the past week in anticipation of a revival of bookings in the EU region, although actual deals have been limited by constraints in increasing export allocations, SteelOrbis learned from trade and industry circles on Thursday, May 6.
Sources said that at least two integrated steel mills have increased HDG prices to $1,100-1,150/mt FOB compared to the indicative levels of $1,010-1,050/mt FOB a fortnight ago. It may be noted that a week ago most steel mills had even halted submitting offers.
The sources said that actual deals concluded during the past week were limited both in the number of trades and volumes, but sellers have been aggressively increasing prices in anticipation that the new EU quota for Indian origin HDG is expected to kick in shortly and that the shortage in the EU market will absorb higher price levels and that prices have significant room to rise further.
“More than the present, local exporters are positioning prices for the short-term future once EU buying resumes and business activity in the Gulf returns after Ramadan. The market at present is showing many buyers and very few sellers in key markets, which will support the sharp uptick in export prices,” an official at a western India-based integrated steel mill said.
“The challenge is not prices at present. The challenge for most exporting steel mills is fixing export allocations in the midst of risks of falling output from shortages of oxygen at the mills and lockdown conditions. Committing volumes and delivery schedules is very difficult under the current pandemic restrictions in the country,” he said.
“Our assessment is based on HDG prices in northern Europe. If these prices are sustained and quotas in the EU kick in, Indian exporters will still have headroom to further increase prices,” he added
Sources said that, among the stray deals reported amid surging prices, were modest volumes to the Gulf. But the sources were quick to add that a lack of deals did not suitably reflect the robust outlook in the short term and which is likely to gain ground before the end of the current month.
