Indian integrated steel mills are aggressively pushing up their billet export prices backed by the strengthening of billet and long product prices in the key overseas markets of China and Southeast Asia and increasing billet prices in the local market while most Indian producers have kept their billet export allocations very low.
Sources told SteelOrbis that the indicative price level for billet from India is at $455-465/mt FOB, up by around $15/mt from last week’s workable price level. At the same time, the number of offers are very limited and mills will offer officially much higher prices - up to $470-480/mt FOB.
Several traders said that the market has been talking of billet prices possibly touching the $500/mt FOB mark in India before the end of current fiscal year and, even though this is still speculative, it indicates the strong bullish sentiments prevailing in the market and the tight supplies for domestic conversion and limited volumes available for overseas shipments. With their own captive rolling mills operating at maximum capacities, integrated steel mills are under no compulsions to ship overseas.
Local billet prices have continued to seek higher levels, moving up INR 500/mt over the past week to INR 32,500/mt ($436/mt) ex-works amid low merchant sales volumes and low stocks available at standalone rolling mills. But, in the trader market, prices have already reached INR 35,000/mt and above ($472/mt) in single deals, indicating very strong sentiment in the local Indian market.
The sources said that an eastern India-based trading firm has reported a modest volume trade to China at $455/mt FOB, which is equivalent to slightly below $480/mt CFR.
“The rapid rise in prices of semis seen over the past week does not reflect the true picture. The price rise in semis was initially triggered by the release of pent-up demand from the lockdown. But the price rise for semis and finished steel seen over the past month is cost-driven. Raw material costs of iron ore and tight supplies are now getting reflected in the price of semis and the growth in margin realizations per ton is actually declining. Producers are still to factor in the entire rise in costs and hence the price of semis and finished steel still has to be pushed up over the remaining quarter of the current fiscal year,” an official at Steel Authority of India Limited (SAIL) said.