Despite the near halt in buying, ex-India billet prices have actually increased with sellers taking a contrarian stance claiming that the bearish market condition are a “demand issue” and that aggressive pricing would not reverse the current trend, and so instead they have pushed for local sales at improved realizations, SteelOrbis has learned from trade and industry circles.
Ex-India billet prices have been reported by local private mills at $540-550/mt FOB, against $530-550/mt FOB a week ago, with sellers acknowledging that, even though the price hike was “notional” and, since there has been no response from the Asian and the Middle East regions, producers have been averse to “get into a losing price war”.
“There is no point in steadily reducing prices and keeping fingers crossed that some deals will come through. Mere adjustment of prices has failed to revive any buying. So, it is strategic to try maintain a slightly higher level and wait for the market to respond,” an official at an Odisha based private mill said.
“The bid-offer disparity is so wide in Asia that a $10-20/mt price cut does not change the dynamics. In a bear market, no one likes a desperate seller. Continuous price reduction becomes a self-fulfilling non-virtuous cycle. Hence, most sellers hope to maintain a higher price line and wait for buying to return,” he said.
However, a section of analysts and trade circles have held that mills’ hiking ex-India prices even in the face of overseas sales drying up stems largely from the support they are finding in the local market.
“Sellers are able to increase price hoping to check the downtrend in the export markets only because the local merchant price is improving, limiting risks of inventory pressures. If more and more producers adopt a contrarian pricing strategy, bearish contagion can be restricted,” a steel sector analyst with a Mumbai-based financial advisory firm said.
Sources said that local billet merchant trade prices have gained INR 700/mt ($9/mt) to INR 48,500/mt ($591/mt) ex-Mumbai and are up INR 1,000/mt ($12/mt) to INR 46,350/mt ($565/mt) ex-Raipur in the central region.
