Indian HRC export prices under pressure from higher freight and tight competition

Monday, 07 October 2019 16:13:02 (GMT+3)   |   Kolkata

Indian hot rolled coil (HRC) producers have been mostly reluctant to provide large discounts over the past week, though they have been forced to decrease prices to conclude deals, seeing rising competition in Asia and higher freight costs, which impact FOB levels, SteelOrbis has learned

Market sources said that export offers for HRC from large exporting steel mills are at $415/mt FOB on average. In late September, official offers from mills have been at $420-425/mt FOB.

Although total export activity has remained at levels that are not high as exporters have not been willing to aggressively push contracts owing to the festival holidays, at least two western Indian steel mills have concluded HRC export contracts for early November delivery with buyers in Vietnam at a level below $415/mt FOB.

The Baltic Dry Index has increased 50 percent over the past three months and this has triggered a problem for Indian HRC exporters, according to a trading source. One of the major mills said that freight from India to Vietnam has increased by $4-5/mt to $22-24/mt recently, SteelOrbis has learned. “Some shipping lines have warned of a 100 percent increase in freight rates over the coming months as shipping lines attempt to de-carbonize operations to fight climate change. Any further hike in freight rates will hang heavy on steel exports from the country, as buyers will have to bear a higher CFR rate,” a Mumbai-based trader-exporter said.

Tight competition in Asia has also been a reason for the further price decrease. The last deals for Russian HRC in the second half of September have been signed at $437/mt CFR. Moreover, some fresh offers for big coils have been heard at $420/mt CFR on Monday, October 7. Accordingly, Indian mills are unlikely to keep export prices stable in the coming weeks as they still have unsold HRC allocations.

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