Sentiments in the Indian billet export market turned bearish and prices came under pressure in the past week on a combination of negatives of drop in the price of semis in China and Indian integrated steel mills’ challenges in committing deliveries amid reports of at least two contracts re-negotiations following delayed loading at ports, SteelOrbis has learned from trade and industry circles on Wednesday.
Ex-India IF billet prices are at $670-690/mt FOB and trade activity fell sharply in a reversal of bullish conditions. One of the Indian BF-based mills is going to close a tender this week, but no results were reported so far. The tradable value is estimated by sources at slightly above $700/mt FOB.
The sources said that prices of semis in China were showing signs of softening and buyers were expecting the market of billets to stabilize at lower levels and that the uptrend had run its course and hence larger volume buying was being deferred.
At the same time, on the supply side, Indian sellers were unnerved by reports that at least two loading operations at southern ports against contracts last month had been delayed by at least 2-3 weeks as a result of port operations hit by lockdown restrictions.
It was heard in the market that delivery terms of these delayed supply contracts were being re-negotiated but there was no clarity available whether penalty clauses would kick in or force majeure claims of sellers would be accepted.
“With off-take of billets by secondary steel mills at a low key, integrated producers have sufficient export allocations. But July delivery contracts are a big challenge in absence of transport and east coast ports operating at low capacities and at least two declaring force majeure. The risk of default in meeting supply contract terms has impacted exports and mills are biding time before resuming aggressive bookings as before,” an official with a government steel mill said.
Sources said that among the stray deals reported in the market during the past week was a contract at $650/mt FOB. This was an exception as most offers to Southeast Asia for IF billet from India were at $740-745/mt CFR, which corresponds to $685-690/mt FOB.
