Indian integrated steel mills’ hot rolled coil (HRC) exports have overcome Sino-Indian tensions to bounce back with higher activity from China-based buyers before the recent holiday, although most sellers had to settle for concluding contracts at prices slightly lower than targeted.
Market sources said that, while most integrated steel mills maintained HRC export offers in the range of $420-425/mt FOB, most deals were concluded after adjusting such offers to the range of $410-420/mt on FOB basis.
The sources said that deadly clashes at Sino-Indian border early this month had initially created nervousness over trade relations between the two countries and reports of retaliation of holding back consignments at ports by both sides: however, both local exporting steel mills and Chinese buyers remain optimistic that trade is too critical to be impacted by the souring of relations and both buyers and the selling side became more active over the past week.
According to sources, an eastern India-based steel mill concluded an export deal for an estimated volume of 35,000 mt with a Chinese trading firm at a price estimated at $410-412/mt FOB, which is equivalent to $432-435/mt CFR. Most sources have said that this is a very good price for the customers as most Indian mills were offering not below $445/mt CFR to China last week.
A state-run steel mill contracted 25,000 mt of HRC with a China-based buyer at $415-418/mt FOB for August shipment and is negotiating for a repeat supply contract of the same volume for September, sources said. The price level translates to $437-438/mt CFR.
One of the sales has also been rumored at slightly above $440/mt CFR to China, which is about $420/mt on FOB basis, but this has not been confirmed by the time of publication.
Purchasing activity in Vietnam has been lower last week. Two steel mills have reported they sold at $416-418/mt FOB, which is equivalent to $441-445/mt CFR, but there has been no confirmation from the buyer’s side by the time of publication. Taking into account that local HRC is priced at $450/mt CFR and that some sales of ex-China coils have been heard at $448-450/mt CFR Vietnam, Indian customers will also target $450/mt CFR.
“Given the sensitivities over current India-China relations and the boycott of Chinese products in some sections of India, most exporting steel mills are keeping dealings with buyers in China under the radar. But after initial uncertainties, exports are back on the rail. Of course, with steel mills in China increasing production steadily, buyers are becoming price-sensitive and concluding deals only at lower levels,” an official at one steel mill said. “But alternative markets like Vietnam are also showing strong buying interest, which will lower significantly the downside risks to current ex-Indian HRC prices,” he said.
