Ex-India hot rolled coil (HRC) prices have been under very strong pressure from the local market, where mills have faced rising inventories because of slow demand, while major buyers in the international market have also been actively asking for discounts. As a result, new export deals have been done in most major outlets, but only after discounts, SteelOrbis learned from trade and industry circles on Tuesday, June 9.
The tradable level for ex-India HRC in the Southeast Asian market has continued to decline, as sellers have had not that many available trade destinations so far, so they have agreed to give some discounts. One of the mills managed to sell a sizable volume of HRC (most of it 3 mm base grade, but at least 20 percent is 2 mm) to Vietnam at $555/mt CFR, which translates to $525-535/mt FOB depending on freight. Indian HRC was sold to Vietnam around 10 days ago at $575-576/mt CFR and last week mills were ready to sell at $565/mt CFR, but buyers have managed to push for lower prices. Indian exporters have had a strong need to sell, so they provided the biggest discounts, while sellers of Indonesian HRC, for instance, have been providing smaller discounts, of just $5/mt compared to late last week.
In addition, sales of up to 90,000 mt in total of Indian HRC are reported to have been done to the GCC, to the UAE in particular, at $600/mt CFR. Due to significant transportation challenges, the freight from India to the UAE as a final destination is assessed as ranging from $50-55/mt to as high as $70-75/mt. So, the FOB level in these latest deals translates to $545/mt at best, but is maybe even lower down to $530/mt FOB if the final transportation route is longer. This means that, for the moment, Indian suppliers have a lack of choice of where to sell, so they have to provide discounts in order to push volumes.
According to the sources, the slowdown in domestic sales and rising inventories were prompting a few large Indian mills to be slightly more aggressive in pushing overseas sales by higher discounting. However, demand weakness and strong competition with China and other Asian suppliers have been exerting pressure as well.
An official at an eastern India-based mill, not currently active in exports, said that available information indicated that prices of $510-520/mt FOB were sought by some buyers, but there is no clarity on whether such deep discounts will work for sellers, amid their rising local costs of production.
In addition, a few deals for Indian coils have been reported for the European market at around $650-660/mt CFR. This has been confirmed by the major market players, and they estimate the FOB levels at $580-590/mt FOB, considering that the volume was not very small. But in general, there is still an issue in selling to Europe as buyers there have been preferring local sourcing to meet domestic demand, while the challenges of quotas have persisted.
The SteelOrbis reference price for ex-India HRC has settled at $520-580/mt FOB.
