Indian steel mills have aggressively cut hot rolled coil (HRC) export prices during the past week to push higher volumes overseas to check rising inventories as most local user industries remain closed, SteelOrbis has been informed. Mills are selling for May shipment, but their allocation for next month will depend on the developments in the domestic market in India after the first phase of lockdown which is due to end on April 14.
Ex-India HRC export prices have fallen to $370-390/mt FOB over the past week ended April 6, down by around $10-15/mt compared to one week earlier. The wide price range is due to different offers to Asia and the Middle East. Deal prices to Vietnam from Indian mills are at $370-375/mt FOB, while the level for the GCC and Turkey is at $385-390/mt FOB. According to trade circles, local steel mills could go in for further cuts in HRC export prices with the Indian currency hitting a historical low of INR 76.20 to the US dollar, providing a window to large integrated exporting steel mills to refocus on overseas markets like Southeast Asia and the Gulf region.
Most export contracts were for late May or early June deliveries by when exporters expect port operations to normalize.
Sources said that an eastern India-based steel mill has sold about 35,000 mt of HRC to Vietnam for late May delivery at $376/mt FOB, which corresponds to about $395-396/mt CFR. Moreover, there were reports of a much smaller volume traded by the mill to Vietnam at about $370/mt FOB or $390/mt CFR late last week. According to sources, Indian sellers are facing strong pressures in Vietnam from competing exporters, but for Indian steel mills liquidating stocks at even marginal realizations it has been important to sell to export markets in view of the negligible bookings in the local market.
A western India-based steel mill has reported an export contract with a Gulf-based trading firm for 5,000 mt at $385/mt FOB, with sources estimating this will be around $405-410/mt CFR. According to the sources, another western India-based steel mill has also concluded an export contract for 7,000 mt to the GCC at the price of around $390/mt FOB ($410-415/mt CFR), though this was for thinner gauge than usual material exportable from India. Ex-India HRC prices in deals to the GCC fell by $15-20/mt from the previous level of $405/mt FOB.
“It is true that the weak local currency is enabling Indian steel mills to be aggressive in exports. But the fact is export is the only option to navigate the standstill in local market conditions. Export price cuts have more than negated the benefits of the weak currency. But domestic steel producers are concluding contracts at even nominal margins as inventory-carrying costs need to be offset,” a manager at JSW Limited said.