Indian hot rolled coil (HRC) exporters are seeking to exit key traditional markets in Asia, particularly Vietnam, at least for the short term due to the differences in acceptable valuations between buyers and sellers. Instead, they are turning their focus to ‘virgin’ alternative markets even at the expense of much lower trade volumes, SteelOrbis has learned.
Indian exporters have been unwilling to adjust prices below $860-870/mt FOB, which is already at a discount to prevailing local sales realizations, while buyers in Vietnam were seeking valuations of $870-880/mt on CFR basis.
According to the sources, barring for one stray deal by an eastern Indian steel mill of a modest volume of 10,000 mt at $830/mt FOB to maintain market presence with a long-term Vietnam-based customer, Indian mills generally are heard to be shifting out of Asia and concluding modest-volume trades to the new newer markets of Egypt, Colombia, Venezuela and the Dominican Republic.
The sources said that, even though average trades in these newer markets did not exceed 5,000-8,000 mt per deal, higher prices of $870-890/mt FOB were more acceptable to buyers. Also, the smaller-volume deals have not been a big issue for Indian exporters in view of strong local demand and realizations above the $900/mt mark in the local currency equivalent and low inventories.
“The markets in the Middle East and Latin America are much smaller than the traditional Asian destinations for ex-India HRC. But when domestic demand and prices are rallying, the increasing presence in new markets where per mt realizations are stronger is not an impediment,” a steel sector analyst with a Mumbai-based financial services firm said.
“Exporting to Asia at a discount to local sales prices is unviable when energy costs are spiralling. However, increasing volumes in the Middle East and Latin America will face strong headwinds of extremely high freight costs and thinner-gauge demand in these regions,” he said.
A western India-based steel mill has reported a trade for around 5,000 mt with a Caracas-based buyer at a price heard at around $880/mt FOB, market sources said.