Despite some resistance from Vietnamese buyers, import HRC prices in Vietnam have continued to go up and a further increase is even expected, taking into account the recent announcement about the limitation of export support from the Indian government to major exporters from India.
A few contracts for Indian HRC have been closed at $530/mt CFR Vietnam and slightly higher up to $535/mt CFR by the end of the week for 5,000-10,000 mt each. As SteelOrbis reported earlier, previous contracts were done at $525-529/mt CFR. Indian sellers are expected to increase prices further soon.
This week, the Indian government has announced the limitation of support for local exporters. According to the document published on September 1 by India’s Directorate General of Foreign Trade (DGFT), the total reward granted to an exporter under the Merchandise Export from India Scheme (MEIS) shall not exceed INR 20 million ($272,643) during the September-December period. The decision is with immediate effect. Benefits to exporters under the MEIS will be fully withdrawn from January 1, 2021. The Indian government is preparing a new supportive scheme called the Remission of Duties or Taxes on Export Product, which is expected to replace the MEIS, but for now no details are available about the possible amount of support for exporters.
According to Indian exporting mills, the current benefit under the MEIS to each contract was 1.9 percent, which is expected to be cut significantly due to new limitations and at the end of the day it will be fully lifted. And the other benefits to exporting companies will stay at 1.6 percent.
As Indian mills will try to offset their losses, they will have to increase HRC export prices by around 1-2 percent, which translates to $5-10/mt from the latest deal price level.
Apart from ex-India HRC sales to Vietnam, Chinese sellers have been more active. There have been reports of contracts from traders at $535/mt CFR on average to Vietnam recently.
The SteelOrbis reference price for imported HRC has been increased by $6-8/mt since early this week and by $10-15/mt since late last week to $530-535/mt CFR.