Indian flat steel exporters, mainly large domestic steel mills, have been seen to be aggressively pushing volumes overseas, lowering offers riding on the weakening local currency and fighting to check rising inventories due to subdued domestic demand, traders said on Monday, August 19.
“Most of the trades reported in the market have been from large local steel mills. The export push is expected and natural when the domestic market is faced with a severe demand crunch leading to almost every mill facing rising inventories,” a Mumbai-based trader said.
“Trader-exporters have remained relatively quiet during the past week. This is largely because medium-scale trading firms are facing problems in securing pre-shipment export credit from banks and larger steel mills enjoy better leverage with lending intuitions to get pre-shipment export credit at comparatively better rates,” the trader added.
In key export markets like Southeast Asia, there has been a tussle for buyers among suppliers of ex-India and ex-China materials. Though Chinese suppliers are also following the downtrend of prices, Indian mills have been more successful in concluding deals.
Indian hot rolled coil (HRC) offers have plunged by $15/mt to $460-470/mt FOB over the week ended August 19, according to market sources.
The sources said the drop has been partly offset by the weakening of the rupee beyond INR 71 to the dollar, a six-month low. However, the currency fluctuation is not the main reason for the price decline as large mills decided to adjust offers by more than $10/mt putting strains on margins as their inventories need to be liquidated to check carrying costs.
Sizable volumes of HRC produced by JSW Steel were traded in Vietnam at around $458/mt FOB ($478/mt CFR) for September shipment last week. Though mills were offering in the range of $460-470/mt FOB early last week, on Monday, August 19, market sources reported that all major Indian exporters (JSW Steel, Tata Steel and Essar Steel) are ready to sell at $460/mt FOB ($480/mt CFR Vietnam) and can provide discounts of up to $5/mt to push up sales volumes as they still have some unsold coils for September shipment.
Indian HRC exporters have been active in other sales destinations. Offers for southern Europe and Turkish buyers have been given at $460/mt FOB (equivalent to about $490/mt CFR Turkey). Seems that Indian prices may become among the most competitive in these destinations and the main issue for suppliers will be the volumes that can be sold.
Indian cold rolled coil (CRC) offers by large Indian domestic mills have been lowered sharply during the past week by around $20-25/mt to $505-510/mt FOB, according to market sources.
However, the sources said that no significant volume trades have been reported by large steel mills during the past week, ostensibly owing to stiff competition with ex-China offers.
Indian export offers for plates have largely been kept unchanged at $565/mt FOB, according to market sources, who added that these offers are largely nominal and that there has not been any buying interest from key markets for the past several weeks. The offers are only indicative in absence of any business activity in this segment.