Indian hot dip galvanized (HDG) export activity has fallen silent during the past week following the weakening of flat product prices in the key markets in the Gulf and Europe at a time when Indian producers have effected across-the-board hikes in local sales of flat products, SteelOrbis learned from trade and industry circles on Thursday, October 7.
Though officially mills kept prices unchanged at $1,110-1,130/mt FOB, they have been unwilling to push trades at such levels which were at discounts to local prices, following price increases over the past week, and no deals have been heard in the market.
Sources said that sellers were preferring to pull out of HDG exports and wait until such time when higher local prices could be adjusted to export prices. However, in view of falling flat product prices in the Gulf and the EU and buyers continuing to defer supply contract talks for January deliveries, sellers will face challenges to align export prices to the price levels in the local market.
“With flat product prices falling in the Gulf, the landed price differential between hot rolled coil (HRC) and HDG has narrowed to $30-50/mt. Such low margins for high value addition does not make overseas sales viable in the current conditions,” a source at a private flat product steel mill said.
“Ex-India HDG prices need to move up a least $50/mt or, in other words, the increase in local sales price must be factored into export offers, for sellers to resume trading. With local sales improving, sellers are taking a pause from overseas,” the sources said.
