Indian billet suppliers have been able to raise their export prices slightly over the past week, but traded volumes have been limited by Chinese buyers’ caution over long delivery lead times and fears that some speculation has been triggering the uptrend and not the fundamentals of finished steel prices, SteelOrbis has learned from trade and industry circles.
Indian integrated steel mills have been successful in pushing up ex-India prices to $620-625/mt FOB, up from levels of $591-622/mt FOB a week ago. Though mills like state-run Rastriya Ispat Nigam Limited (RINL) has been the most aggressive in floating offers, the volumes offered by most exporters have been modest, not exceeding 10,000-30,000 mt, as Chinese buyers are concerned that the higher prices will not be sustained over the current long delivery periods. Moreover, since yesterday’s drop in futures prices, bid prices from Chinese buyers have retreated and many traders have taken a pause from new bookings.
According to market sources, RINL, which had floated an export tender for 150 mm billets early this week, targeted a minimum of $630/mt FOB after closing its previous sale at $622/mt FOB late last week. But according to a number of sources, the tender has not been closed and the company will have to re-tender. “They did not get the FOB they wanted,” an international trader said.
An eastern India-based steel mill is heard to have concluded a deal for 20,000 mt with a China-based trading firm at a price of $620-630/mt FOB for end-of-December delivery. The transportation costs are assessed at $90/mt at the moment, taking into account additional expenses for waiting at Chinese ports.
According to market sources, on CFR basis the latest deal for ex-Indian billet was at $720/mt CFR late last week, which was the highest level the market reached. But in the middle of this week, bids for imported billet in China dropped to $705-710/mt CFR at the highest. This means that traders will bid below $615-620/mt FOB in the next bookings for ex-India material.
The same mill also reported a deal with a Gulf-based buyer for a smaller tonnage of 10,000 mt at $620/mt FOB, sources said.
“Some buyers in China are looking for billet. But trading volumes are being limited by long delivery lead times, risks of December delivery commitments being missed by suppliers, and fears that much of the current rise in prices of semis is arising from speculative trades and not sustainable higher prices of finished steel,” an official at an Odisha-based integrated steel mill said.
It has been pointed out that exporters are also seeking to increase export prices despite relatively low trading volumes as supplies from select regions like Raipur in central India are expected to tighten. Sources said that merchant sale prices of billets have increased to around INR 42,000/mt ($570/mt) ex-works, up from the lowest level of INR 40,600/mt ($551/mt) a week ago.
$1 = INR 73.70