Indian integrated mills have virtually stopped submitting offers for hot rolled coil (HRC) exports in Vietnam over the past week as weak demand has made prices largely irrelevant in triggering sales and instead suppliers have been shifting their marketing drive to the Gulf region despite lower volume opportunities, SteelOrbis learned from trade and industry circles.
Ex-India SAE1006 HRC prices were mainly at the range of $840-850/mt FOB, down from $840-880/mt FOB a week earlier. The higher end of the range slipped in line with the decline seen in the Middle East. Current prices do not include the tradable level from India to Europe as no new deals have been reported yet.
Indian mills have been unwilling to cut offers below $820/mt FOB, as desired by Asian customers, in Vietnam in particular. Demand in the Asian region, impacted by the resurgent Covid-19 pandemic, was so weak that pricing as a tool to drive sales is not working, with no trades reported over the past week.
Sources said that, even though the average deal size in the Gulf region has been on the lower side compared to the usual trades in Asian markets, prices there are still attractive in terms of keeping inventories moving at a time when local sales volumes have been dipping for most producers.
“We do not think that adjusting offers to the $800/mt FOB mark will make any difference to the lack of buyers seen in Asian markets. Demand for imports is just not there in view of the pandemic situation worsening,” sources at ArcelorMittal Nippon Steel Limited (AMNS) said.
“The x-India HRC floor for most mills is $820/mt FOB. If there are no buyers, so be it. Lowering prices beyond a certain point can be counter-productive in cyclical markets. We have to tide over the current demand depression with a combination of local market focus and developing newer destinations,” he added.
At least two other officials at private steel mills said that they had commenced supply contract negotiations with EU-based buyers for deliveries in January and thereafter for when new import tariff quotas would be available to buyers, and this was also a primary reason for sellers being unwilling to cut prices drastically to push sales in Asia right now.
Most offers from Indian mills to the UAE have been heard at $920-930/mt CFR versus the previous deal level at $950-960/mt CFR. This level corresponds to $850/mt FOB or so.
Sources said that a western India-based mill has concluded a small-volume trade for 10,000 mt with a Middle Eastern buyer, not in the UAE, at a price of around $820/mt FOB, but for lower grade coils. Another trade was also with a second Gulf-based buyer for 8,000 mt at $830/mt FOB.