Indian hot rolled coil (HRC) exporters have dropped their prices over the past week in reaction to increased competition across the Asian and Gulf markets, and in some markets, like Europe in particular, Indian producers have gradually started to regain competitiveness after the government scrapped the export tax, SteelOrbis has learned from trade and industry circles. However, the possibilities of increasing sales in other destinations and the effect of the duty removal remain largely unclear.
Ex-India HRC prices have dropped to $518-530/mt FOB with the midpoint at $524/mt FOB from $520-545/mt FOB a week ago, so losing $8.5/mt over the past week. But there have been no significant deals reported in the market, at least for now. Indian sellers have been re-assessing export prices and volume allocation strategies after the government scrapped the 15 percent export tax imposed six months earlier.
New offers from one of the major mills in India have been reported to southern Europe at $575/mt CFR lately, which is in line with the lowest deals rumored last week for other Asian origins. “For Europe, boron-added HRC was not good, so I think India will increase sales [to this destination now],” a trader said. As reported previously, after the imposition of export duty in May some mills switched to boron-added HRC exports, which were not covered by duties, but some customers had less interest in such materials.
In the Gulf, some offers from India have been heard at $560-565/mt CFR, versus $585/mt CFR a week ago.
Indian suppliers are going to come back to the Vietnamese market as well, but no fresh offers have been reported for now, as demand is very low in the country and customers are currently focused on negotiations with domestic sources.
“The workable price is at a near bottom at around $550 CFR in Asia. Indian mills hence do not have much headroom in being more aggressive. At best, mills can be expected to re-work higher volume export allocations, particularly for non-alloy grade HRC, for which the export tax has been withdrawn,” a Mumbai-based distributor said.
“But then the question remains whether higher volume offers will attract sufficient buying when global demand continues to remain weak. Without the levy of 15 percent export tax are mills in a position to drop Indian prices below the $500/mt FOB mark? The answer is not yet clear and will be by the end of the month,” he said.
However, one official at a private mill struck a note of caution. “The export tax disrupted international trade. Once trade is disrupted, it is very difficult to get it back. Even if it does come back, it will take time for exporters to convince buyers of stability,” he said.
“Sudden changes to terms of trade erode confidence between buyers and sellers particularly amidst globally bearish conditions. In the immediate terms, we assess Indian exporters will increase volume offers and wait and watch the impact of slight improvements in ex-China offers,” he said.