Negative sentiments have increased in the Indian billet market with local prices crashing and export prices going down in response to poor demand in Asia, sources told SteelOrbis on Wednesday, January 27.
The sources said tentative signs of a correction in the local rebar market triggered a sharp reduction in billet off-take and in prices among secondary steel mills, while integrated steel mills have largely stayed away from billet exports, unwilling to conclude trades at a much lower price level.
Market sources said that local billet prices have slumped to a range of INR 35,200-35,500/mt ($482-486/mt) ex-stockyard, down by INR 2,650/mt ($36/mt) from a week ago.
Despite a demand-supply mismatch persisting for rebar, prices have started to seek lower levels, and so secondary steel mills were cautious as regards fresh bookings of billet in view of the rising organized resistance by a number of user industries to spiralling prices.
Buying interest in ex-India billets in the export market has also become negative during the past week, with buyers restricting themselves to contracts only at “attractive valuations and preferring a wait and watch mode, anticipating the recent uptrend of steel prices reversing,” a market source said.
The lack of buyers at higher levels has prompted Indian billet export prices (based on possible sales from integrated steel mills) to decline to $560-570/mt FOB, down by $5-10/mt compared to last week.
At least two traders have confirmed that an eastern India-based steel mill commenced negotiations with a large Asian trading firm at a price offer of $570/mt FOB, but pulled back the offer after the buyer pegged its valuation ceiling at $585/mt on CFR basis, which is $560/mt on FOB basis maximum.
The sources said that there is a rumour about a stray deal for a modest tonnage to Asia at $560/mt FOB or slightly below, but this could not be confirmed by the time of publication.
$1 = INR 73.00