Ex-India billet trading muted amid low allocation, one trader sells at low price

Wednesday, 04 November 2020 17:21:20 (GMT+3)   |   Kolkata

Indian billet exporting mills have still been insisting on higher prices, but have failed to find a response from the majority of buyers for now as bids from China are still not sufficiently high and given the weak demand in Southeast Asia. Overall demand in the local market in India has been sufficient for the domestic mills and they have been cutting their export allocations. One deal from a trader for Indian billet, purchased earlier, has been reported at a low price.

The price level for Indian billet in the export market has increased marginally by $2.5/mt week on week on average to $425/mt FOB, while most official offers from mills are starting from $430/mt FOB.

But trading activity has been slow as the highest price ideas of buyers in Southeast Asia have been at $450-455/mt on CFR basis ($425/mt FOB), traders said on Wednesday, November 4. At the same time, exporting integrated steel mills in India were not willing to aggressively price billet in order to push volumes overseas given the strong local demand and good realizations, while Chinese buyers have preferred to wait for a price correction before concluding transactions. The current workable price level for ex-India billet to China is at below  $445/mt CFR.

One of the major trading houses has sold 20,000 mt of Indian billet at $442/mt CFR Thailand for December shipment, but according to a number of sources the contract was concluded a week or 10 days ago. This price level has not been assessed as reflecting the current market conditions as none of the Indian sellers will agree to a price below $450/mt FOB at the moment.

An exporting major like Tata Steel has reported that it has virtually stopped all exports to China, while another like Jindal Steel and Power Limited (JSPL) have reported that it has been continuously reducing exports of semis in order to meet rising demand for flat rolled products in the domestic market.

Low buying interest has been reflected in the fact that the state-owned mill has had to extend the last date for an export tender to November 5 after receiving only two bids below the unofficial reserve price of $425/mt FOB. Though the tender is slated to close on Thursday, at least two sources said that there was a distinct possibility of the tender being cancelled as buyers’ response still remained muted.

In the local market in India, prices remained at the higher level of INR 30,200/mt ($405/mt) ex-stockyard after the sharp price increase late last month.

$1 = INR 74.40

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