Russian HRC exporters have been struggling as regards pushing volumes abroad amid the Western sanctions imposed on Russia due to its war on Ukraine and the slowdown of the local HRC demand. As a result, new deals for ex-Russia HRC have been reported to South Asia, India and Nepal in particular, at good discounts, SteelOrbis has learned from the market.
A contract for 30,000 mt of ex-Russia HRC by a Chinese trader was done to India at $650/mt CFR for June-July shipment, which is $60/mt below a sale heard from Russia to India a month ago. Another deal for 45,000 mt of HRC was heard to Nepal at a slightly higher level - $660/mt CFR. Sources said that both deals were signed at least early last week, while now the tradable levels should be lower.
Also, one Russian mill, which has a very limited number of outlets for export sales due to the sanctions and is focused on Asia, has been heard in negotiations to India at around $665/mt CFR with the price negotiated in Indian rupees. However, according to sources, the buyers’ idea is hardly above $635/mt CFR for Russian coils now.
Sources in the Indian steel market have confirmed that local distributors have concluded deals for ex-Russian HRC through dealers in China for two reasons. Firstly, the discounts offered on such import prices were attractive and landed prices were still at a discount to local prices, at least at the time when the deals were done. For example, at the moment the tradable level for HRC in the local market in India is at INR 61,300/mt ($782/mt) ex-Mumbai, down by INR 1,700/mt ($22/mt) over the past week, including 18 percent GST.
“In current bearish market conditions, distributors are exploring all opportunities of price arbitrage. Like in the case of coking coal and crude oil, ex-Russia offers are at significant discounts and margins for importers are higher than margin from sales of local HRC. Also, payment facilities through India-China-Russia remain relatively outside the sanctions and bother sellers, buyers and intermediaries have lower payment risks,” a Mumbai-based steel distributor said.
He said that, while it could not be confirmed, some volumes of ex-Russia HRC imported into India were for re-export by traders to destinations like the Gulf as ex-India prices of local mills were still higher.
Industry sources said that, as in the case of all Russian commodity exports, sellers are accepting payments in many currencies like Indian rupee and UAE dirhams. An importer making payments in rupees takes all risks of currency fluctuations.