India’s flat steel import activity has come to a near standstill during the past week in reaction to the slight increase in ex-China offers and sentiments have been further weakened by the sharp weakening of the rupee making imports costlier at a time when most Indian steel mills and market intermediaries are already carrying higher-than-normal inventories, traders said on Thursday, September 5.
According to market sources, ex-China hot rolled coil (HRC) offers have increased marginally by $5/mt week on week to $490/mt CFR Mumbai. The sources said that buyers have been reluctant to accept the increase in offers claiming that the benefits of RMB’s depreciation have not been factored into offers and, since there is no urgency to restock either by traders or end-users, they have preferred not to make any bookings. However, a few merchant traders have booked nominal volumes estimated by the market at around 3,000-4,000 mt to meet their re-export commitments to neighboring markets.
Not only has the increase in ex-China offers coupled with the rupee plunging to a nine-month low at INR 72.10 to the dollar made the landed price of imported flat products expensive, there is a also very tight situation in securing trade credit from financial institutions. “All short- and long-term economic indicators have merged in the negative zone. The increase in offers is a contradiction to the depreciating Chinese currency and the escalating US-China trade skirmish. Given both these elements, no importer is willing to lock up capital by concluding import contracts,” a Mumbai-based trader said.