Uncertainty in the local rebar market and the sharp fall in domestic prices of semis have forced Indian integrated steel mills to sharply lower their billet export prices, but they have still failed to trigger significant buying interest in the key Asian region, with buyers expecting further drops, sources told SteelOrbis on Wednesday, February 3.
Sources said that, despite the government increasing infrastructure spending in the national budget, negative sentiments have deepened in the local rebar market and the lower off-take of semis has forced integrated steel mills to cut merchant sale prices of billet for the second consecutive week by INR 1,000/mt to INR 34,200-34,500/mt ($468-473/mt) ex-works.
Ex-India billet prices have come to a range of $525-535/mt FOB, but buyers are still reluctant to voice firm bids after a stray deal closed at $532/mt FOB last week. In the previous week, exporters from India were targeting $560/mt FOB minimum.
“The finished steel market is showing all signs of losing upward momentum even if it is too early to take a call on it entering a bear phase,” a steel sector analyst with a Mumbai-based financial services firm said. “Secondary rebar producers are facing pricing pressures and hence are lowering off-take of semis. Even if integrated steel mills hike finished steel prices, this could lead to oversupply of semis for merchant sale and this is evident in billets continuing to seek lower levels and producers facing the choice of either higher inventories or increasing export allocations at a time when buyers in Asia are retreating,” he said.
As SteelOrbis reported last Friday, a state-run steel mill floated a billet export tender for around 30,000 mt of 150 mm billet, which was closed at $532/mt FOB to a leading international trading company. The material is expected to be sold to Thailand or China, according to sources.