Indian HRC suppliers have had to cut prices for foreign buyers further over the past week, though this did not lead to higher trading activity as cheaper coils from China were still available and other major exporters from South Korea and Japan also followed the downtrend. Moreover, high volatility in quotes submitted by freight forwarders led to challenges in negotiations on CFR prices, SteelOrbis has learned.
Offers for HRC from India have been coming from major mills at $485-495/mt FOB, down $5-10/mt over the past week. Trading has been slow in all major destinations.
In Europe, ex-India offers have been at about $520/mt CFR (corresponds to $485-490/mt FOB). Similar prices customers can be received from Turkey and the transportation period will be lower, and so there were no interest in Europe in the Indian offers.
In the Middle East, offers from India have slipped to $510-520/mt CFR UAE ($485-495/mt FOB), while customers have been silent, buying only small tonnages from China at prices $25-35/mt lower.
In Asia, the situation also remained difficult. Market sources said that at least two local steel mills were forced to call off negotiations with buyers in Vietnam and Thailand respectively after submitting HRC offers of $495/mt FOB due to disagreement on delivery commitments.
The high volatility in quotes submitted by Indian freight forwarders has stemmed from uncertainties over shipping liners’ schedules to key export destinations like Southeast Asia, in the wake of the spread of the virus in China. The volatility in freight forwarding rates has also been compounded by reports that the Indian government is planning to impose a ‘standard operating procedure” (SOP) on freight forwarders and non-vessel-owning common carriers, that will aim to regulate the profit margins on the freight components of forwarders, market sources said.
Several traders said that the volatile rates submitted by freight forwarders have been making it difficult for domestic steel mills to negotiate CFR prices, apart from the difficulty of meeting delivery commitments with shipping lines re-routing destination ports and delays of seaborne cargoes.
The sources said that issues over freight rates will ensure that Indian exports will continue their declining trend and the possibility of the fall gaining momentum in the current month.