More ex-India billet sellers have joined the earlier bandwagon in hiking up prices riding on enhanced optimism, which, however, has been belied as higher levels have faced strong buyer resistance and with relatively smaller-volume deals only being successful after price increases were partially rolled back, SteelOrbis learned from trade and industry circles on Wednesday, July 23.
A higher number of Indian mills are reporting offers at around $435-440/mt FOB, versus $425-430/mt FOB last week and even some Tier I mills are submitting prices as high as $450/mt FOB.
However, according to sources, while most Asian steel producing markets witnessed attempts by mills to increase prices, strong buyer resistance too was noticed and ex-India sellers faced strong challenges in pushing through offers at higher levels.
They said that, even though mills across the Asian region were bullish on the outlook and nudging up prices of semis, buyers were not optimistic enough to commit to higher prices and instead were either remaining on the sidelines or pushing for significant adjustments to offers to finalize supply contracts.
For example, the sources pointed out to an eastern India-based integrated mill which has submitted an offer for prime concast billet to Asia at $445/mt FOB, but the deal could only be finalized after the higher price was rolled back to $435/mt FOB, only marginally higher than $430/mt FOB on average a week ago.
Similarly, another large mill submitted an offer for 30,000 mt at $450/mt FOB, but the final price worked out lower at $435/mt FOB for delivery to the UAE, the sources said.
The SteelOrbis reference price for ex-India billet has been settled at $435-440/mt FOB, increasing by $5-10/mt over the past week.
“There is a lot of optimism on the sellers’ side following price gains seen in major Asian producing countries. But from the evidence of deals concluded we do not see commensurate optimism among buyers. The latter do not see higher-priced semis being sustained as it does not match with finished steel prices. Hence, buyers are either resisting and bidding low or remain on the sidelines,” an Indian mill said.
“The hardening of price is a positive. But sellers need to check the irrational exuberance and outlook. Or it can be counter-productive and drive away buyers as the finished steel market is still in a slowdown. Strategic pricing of semis is key to push through deals at a time when buyers and sellers are holding differing expectations,” the source said.
Meanwhile in the local market, billet trade prices have showed a marginal recovery gaining INR 100/mt ($1/mt) to INR 38,800/mt ($449/mt) ex-Mumbai and up INR 300/mt ($3/mt) to INR 36,800/mt ($426/mt) ex-Raipur in the central region.
$1 = INR 86.35