The combination of a further weakening of prices in key destination markets and the local Indian market entering a new downtrend has put ex-India billet prices under pressure. Though limited trade activity was kept alive by modest buying interest from the Gulf region, deals were reported at low prices, SteelOrbis learned from trade and industry circles on Wednesday, July 20.
The recent buoyancy seen in the local Indian billet market has been reversing, with prices edging down from Tuesday onwards in most regional markets, putting pressure on mills. Most large producers have kept ex-India prices unchanged at $550-560/mt FOB, but actual small-volume deals were reported at a deep discount, taking new sales price to as low as $500-510/mt FOB, versus the previous $520/mt FOB.
Sources said that, not only expectations of a price recovery in key overseas markets have been belied, but buyers have been lowering bids with some customers in the Asian market seeking valuations of $520/mt on CFR basis.
They said that, while most local sellers have been unwilling to discount sales to match the widening bid-offer spreads, a few producers concluded deals with Gulf buyers where prices were significantly lower than offer levels but realizations were comparatively higher than in the Asian region.
“Local billet prices have reversed their sustained uptrend. There is a possibility of a correction after the sustained gains. But the much-expected recovery in price of semis in key markets like China which local sellers were expecting has been a disappointment,” a source at state-run steel producer Rashtriya Ispat Nigam Limited (RINL) said.
“For us current workable export prices of $500-520/mt FOB are not viable. Sales at these levels are largely linked to inventory and cost management of individual sellers. Hence, both volumes and the number of trades remain negligible,” he said.
An eastern India-based integrated steel mill reported a trade with a GCC-based buyer for 15,000 mt of concast billet at around $510-5120/mt FOB for September, market sources said.
Meanwhile, local merchant billet sales prices have edged down by an average of INR 500/mt ($6/mt) to INR 49,500/mt ($619/mt) ex-Mumbai and to INR 49,800/mt ($623/mt) ex-Raipur in the central regional market.
$1 = INR 80.00
