Indian integrated steel mills have attempted to increase hot rolled coil (HRC) export prices ahead of effective sharp hikes in the local market for September, but trades particularly in key markets like Vietnam and Europe have been concluded with discounts.
Market sources said that a major steel mill increased its HRC export offers by around $10-15/mt over the past week to the range of $515-520/mt FOB, but most latest deals were concluded below this level, at $495-505/mt FOB. Nevertheless, this means that Indian mills have managed to gradually increase deal price levels by $5-10/mt from late last week.
Vietnamese market in focus
Traders and officials at Indian steel mills said that exporters are willing to conclude deals at a discount in a key market like Vietnam, which during the April-July period this year has overtaken China as the largest destination for Indian steel exports with a total of 1.37 million mt. Exporters have been keen to maintain market presence with discounts and so be in a better position to increase prices in a calibrated manner once domestic HRC prices are hiked in September.
Last week, an eastern India-based steel mill concluded a 20,000 mt HRC contract with a Vietnam-based buyer at $490-495/mt FOB, which translates to around $518/mt CFR. A smaller trade for 12,000 mt was done at $498-500/mt FOB for October shipment, the sources said, which corresponds to $525/mt CFR or so. Another western India-based steel mill concluded a deal for an estimated 10,000 mt with a Vietnamese buyer at around $498/mt FOB against an offer submitted in the range of $515-520/mt FOB. The highest deal price to Vietnam was reported yesterday, August 31, for 10,000 mt of HRC at $500-505/mt FOB or $529/mt CFR, SteelOrbis has learned.
One of the producers has concluded a trade with a Shanghai-based trading firm for 15,000 mt at around $500/mt FOB, market sources said.
Tradable price level in Europe and Middle East now lower
Apart from sales to Asia, one of the major Indian producers has managed to sell a medium-sized lot to Italy at €440/mt CFR, which is equivalent to $525/mt CFR or $495/mt FOB. This deal price level has been assessed by most sources as more than the tradable value for buyers, while not very attractive for sellers. Indian mills have some regular customers in Europe and so they have been trying to save their market presence in this market too.
In the UAE, a deal for Indian HRC has been rumored at $535/mt CFR, but this has not been confirmed by the time of publication. One Indian seller has been offering at $540/mt CFR to the UAE, which is in line with the overall bullish outlook among exporters. But most customers said that bids have not improved much yet and are hardly above $525/mt CFR.
Outlook in Indian HRC market bright so far
Most mills from India are saying that they do not have a lot of allocation for the export market and that this situation is unlikely to change drastically in the near future.
“HRC exporters have to do a fine balancing act between increasing local sales prices to improve margins and calculated discount sales in key overseas markets to maintain a presence among key buyers,” an official at one of the mills said.
“But with local sales prices expected to increase sharply in September, I do not think discounted export prices to conclude sales will be sustained or be feasible. So exporters will have to take a strategic call to increase export prices even if demand remains poor in key markets like China and Vietnam, to reduce overseas shipments and focus on local sales where margins realizations are improving,” he added.
