Indian integrated steel mills have aggressively increased their hot rolled coil (HRC) prices by $20-30/mt on average during the past week to $470-480/mt FOB amid rising domestic demand and local prices hitting a six-month high.
According to market sources, indications are emerging that large domestic steel mills have started to re-prioritize domestic sales over exports and this has been reflected in reports of lower export tonnages on offer and limited export deals concluded during the past week, which has also partly been attributed to higher export prices.
Sources at JSW Steel said that the company which was currently exporting about 55 percent of its total production aimed to bring it down to levels of 15-20 percent by the end of the current fiscal year as domestic demand is expected to increase over the next few quarters.
Officials at Jindal Steel and Power Limited (JSPL) have said that, while exports during the past several months have been robust for the company with significant tonnages shipped to China and pricing opening new markets in the EU, going forward in the current fiscal year the steel producer would taper off overseas shipments with domestic market picking up.
According to a steel sector analyst at a Mumbai-based financial services firm, following the recent surge in domestic prices of HRC since early July, per ton realizations from export sales are about 6-7 percent lower than the comparable sales volume in the domestic market. He also pointed out that exporters’ gains from exchange rate variations have also tapered off compared to the immediate outbreak of the pandemic, with the Indian rupee holding firm above the INR 75 to the US dollar mark.
A few bookings by different mills have been heard at $470-475/mt FOB to Asia over the past week. One of them has been to Vietnam at the lower end of the range (equivalent to around $495/mt CFR) and around 30,000 mt of HRC have also been traded to Vietnam at around $500-505/mt CFR. New offers to Vietnam have been mostly at $505-510/mt CFR from India, which translates to $480/mt FOB and slightly above.
One Indian mill has reported a deal for a modest tonnage of 10,000 mt for Antwerp at $475-480/mt FOB, the sources said.
“Indian steel mills’ refocus on domestic sales is just one aspect of the surge in export price. There are signs of shortages in key markets like Vietnam. These are pushing up HRC prices in most markets and Indian exporters are responding to that too. Of course, it’s a fact that realizations for local sales are higher than for overseas shipments after the recent surge in domestic price and the relative stability of the Indian current against the dollar compared to levels during the lockdown during April-June,” an official at a steel mill said.