Indian HRC exporters optimistic with prices higher despite fall in China, logistical issues

Tuesday, 18 May 2021 16:42:40 (GMT+3)   |   Kolkata

Indian hot rolled coil (HRC) export prices have increased further during the past week, with sellers not responding to bids below the $1000/mt FOB mark even though serious logistical challenges to overseas shipments have emerged amid reports of several delays in loading for previous contracts, SteelOrbis learned from trade and industry circles on Monday, May 18. Optimism remains even despite the recent sharp fall in prices in China.

Ex-India SAE1006 HRC price levels, reflecting deals and the tradable levels at different sales destinations, have reached $1,010-1,040/mt FOB, up by $20-30/mt from last week. Higher deal prices have been achieved in Vietnam, while interest in purchases has started to improve in the Middle East.

Despite robust export prices, the bullish sentiments in the export market took a serious hit during the past week, with at least two east coast ports declaring force majeure, leading to delays in loading operations against contracts concluded last month. At least two sources confirmed that one leading eastern India-based exporting steel mill has already commenced renegotiations of contracts for fresh delivery timeline commitments and to avoid penalties for slippages in deliveries.

Several reports in the market indicating severe disruptions of truck movements between steel mills and ports in eastern India, with truck drivers largely migrants returning home to beat the lockdown, as well as varying rules for inter-state movement of goods, have made movement of export consignments from mills to ports virtually impossible, sources said. Major steel exporting ports like Visakhapatnam and Gangavaram on the east coast and Kandla in the west have either declared force majeure or are operating at less than half capacity with a limited workforce. This has not only disrupted loading operations against past contracts but has forced exporters to be cautious in concluding fresh contracts in the face of challenges in committing deliveries to buyers.

These logistical challenges have limited the number of trades concluded during the past week despite robust prices and active buying interest.

Early last week, the tradable price was at $1,000-1,020/mt FOB. A supply contract concluded by an Odisha-based steel mill to Vietnam was at $1,000-1,010/mt FOB, sources said. This corresponds to about $1,050/mt CFR Vietnam, according to sources. Also, 10,000 mt of ex-India HRC was sold at $1,020/mt FOB.

Later last week, 30,000-40,000 mt of Indian HRC for re-rolling changed hands at $1,070-1,080/mt CFR, translating to $1,030-1,040/mt FOB.

Following price rises in Vietnam, some Chinese traders have started to offer lower-priced positions cargoes with a deal heard at $1,010-1,015/mt CFR after offers at $1,020-1,030/mt CFR. Nevertheless, “I don't see prices falling as very little Indian quantity is available from traders on position. I expect buyers will accept $1,065-1,080/mt CFR for Indian material in a few days,” a major Indian seller said. Another exporter said he believes prices will reach $1,100/mt CFR in Asia soon.

Negotiations for Indian coils have resumed in the Middle East after the holidays, with suppliers targeting $1,100/mt CFR.

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