Indian hot rolled coil (HRC) have increased their discounting on offers but have still failed to conclude deals amid lower bids from Asia and the Gulf region with the competition with cheaper Chinese offers remaining tough in key markets, SteelOrbis has learned from trade and industry circles.
The Indian official offers submitted have remained at $550-570/mt FOB, but discounted prices by some mills have been reported at $520-530/mt FOB. As a result, the reference price level has been lowered by $30/mt on the lower end and by $10/mt on the higher end to $520-560/mt FOB.
But this has failed to trigger much demand. The lowest indications from India for SAE1006 HRC to Vietnam have been at around $560/mt CFR, while Chinese offers even after the latest increase have been better, at $540/mt CFR Vietnam.
The highest level of the ex-India reference price range corresponds to offers to Europe. For instance, new offers to Antwerp have been reported at $620-630/mt CFR, to Spain at almost the same level and an even lower level is possible for Italy. The average freight from India to Europe is around $60/mt.
“The global markets are extremely volatile. We hear of bids below the $500/mt FOB mark in Asia and Gulf buyers are hardly responding to offers submitted by Indian mills,” a source at a private mill said.
“Our own export allocations for the rest of the fiscal year have been reduced to minimal levels. Sales overseas are unviable when the only margin that can accrue is from the depreciation of the local currency against the US dollar. Unless margins are positive at operational levels, we do not think Indian exports will revive. At the same time, there is no positive news of the 15 percent export tax being withdrawn in December,” he said.
According a steel sector analyst with a Mumbai-based financial services company, the benefits from the local currency depreciation accruing to exporters are largely exaggerated.
He said that the Indian rupee depreciated 12 percent against the US dollar, but comparatively less than most other Asian currencies, thereby making exports from other originating countries more competitive and reducing Indian exporters' ability to be more aggressive in prices for overseas sales.
