At least a few Indian mills have resumed confirming hot dip galvanized coil (HDG) bookings over the past week at a deep discount to offer prices responding to the weak conditions in destination markets like the Gulf. Sellers have had to absorb the export tax even at the risk of negative margins from sales realizations, SteelOrbis learned from trade and industry circles on Thursday, June 2.
Small bookings for ex-India HDG have been confirmed by sellers at effective prices reported at $1,080-1,100/mt FOB, while offers have been at $1,150/mt FOB and above. As a result, the reference price for ex-India HDG has fallen to $1,080-1,150/mt FOB, with the midpoint at $1,115/mt FOB, down by $45/mt over the past week.
“For Indian sellers to maintain an overseas market presence, a deep discount is the only option. With flat product prices sliding in southern Europe on weak demand and ex-China prices heard at a 14-month low, Indian sellers are absorbing the incidence of the 15 percent export duty to conclude deals,” an official at a western India-based integrated mill said.
“I will have to confirm bids even at lower levels. Our long-term customers in the Gulf will not respond to me in future if my pricing is not flexible. The present situation does not permit any seller to even talk about increasing prices to offset the export tax. In the long-term interest, as long as there are buyers, we have to confirm deals even if margins are thin or negative at times,” he said.
Sources said that sentiments among buyers in the UAE and Saudi Arabia are mixed with the forecast of prices going in either direction, and hence buyers have been testing the market with small volumes at lower prices. This was reflected in a trade for 4,000 mt reported by an eastern India-based mill with a buyer in Bahrain for July shipment at $1,060-1,080/m FOB net of discount.
A western India-based mill reported a trade for 3,000 mt with a Gulf buyer at a price of $1,090/mt FOB, the sources said.
