The Indian hot rolled coil (HRC) market has hit twin speed-breakers of weak demand in Asian markets and the pile-up of ex-India stocks at ports awaiting allocation of export quotas in the lucrative EU market and a possible antidumping investigation, prompting buyers to defer any fresh trades, SteelOrbis learned from trade and industry circles.
Ex-India HRC prices have weakened to $920-930/mt FOB, down from levels of $940-950/mt FOB a week ago, but still suppliers have failed to attract trades in view of alternative sources available at more attractive prices, particularly in key destinations like Vietnam.
Offers from traders for ex-India HRC to Vietnam have been heard at $940-950/mt CFR, while most bids have still not been seen above $900/mt CFR.
In the EU market, where workable prices are at much higher levels, the double negative of mounting stocks at ports awaiting quota allocations and reports of the launch of an antidumping investigation in the EU into imported HRC of Indian origin has forced buyers to take pause from fresh bookings despite the shortage of availability.
Sources in India said that reports received indicated that an estimated 300,000 mt of ex-India HRC are locked in at ports in Europe awaiting allocation of quotas that kicked in from July 1 until September and, with high volumes still awaiting deliveries at lower tariffs, buyers have not been willing to extend new deals.
At the same time, the local Indian market has been rife with reports that EU market participants have lodged a complaint of dumping against ex-India HRC and sought an antidumping investigation.
According to steel mills in India, there has not been any confirmation of the launch of antidumping investigations by the EU despite several reports indicating this, and Indian steel mills have been in touch with India’s ministry of commerce seeking intervention in securing confirmation through government-to-government channels.
“A lot of challenges have emerged in the EU. Total volumes at ports far exceed the permitted quota for the April-September period and the entire volume would not be delivered at lower tariff rates. Hence, fresh bookings can only be made at higher tariff rates, which might not be acceptable to buyers. At the same time, several reports claim antidumping investigations have been sought by local sellers in the EU. We do not know if such investigations have been launched already. But it a big negative on the horizon,” an official with a western India-based integrated steel mill with a significant presence in Europe said.
At least two traders said that the negatives in the export markets risk having an impact on local HRC prices. If volume shipments overseas trend downwards over the next few weeks, the rise in inventory build-ups and the necessity of directing large volumes for local sales amid weak demand could force producers to cut local base prices by at least around INR 3,000/mt ($40/mt) in view of the present critical linkages between domestic and overseas market outlooks.