Indian billet export activity has remained quiet, but expectations have emerged for a sharp price increase due to the loss of volumes in global trade available from Russia and Ukraine, though in reality the upturn has been tempered by emerging logistical challenges in trade as well, SteelOrbis learned from trade and industry circles on Wednesday, March 2.
Ex-India billet trade has continued to be dominated by government-run mills, while private mills have remained on the sidelines either because of low export allocations available for March and April or because they are balancing the positives and negatives of price movement after trade flows from Russia and Ukraine dry up and taking into account that buyers are seeking alternative sourcing while overcoming new logistical challenges of shipping and freight costs.
The previous tradable level for ex-India billet prices was at about $660/mt FOB first, up by $648-655/mt FOB last week, but exporters were saying that $700/mt FOB has emerged as a realistic achievable price for now as major buyers in the MENA countries start to look for alternative sources. A tender by a government mill for a spot tonnage of 20,000 mt of 150 mm billet has been held. “India is really expensive now, and most mills are planning a further increase in March. The RINL tender this week in which their target is $700/mt FOB has not been closed yet… but may end up getting higher too,” a trader said. One source said that a price up to $770/mt FOB is expected as a real market level soon.
“The market is transforming rapidly in wake of the Russian invasion of Ukraine. Buyers, particularly from the MENA region are looking for alternative sourcing. But there are a lot of challenges before Indian mills receive bookings at higher prices,” a source at a private mill said.
“Making urgent bookings for April delivery because of disrupted supply contracts might not be viable for Indian mills as the fiscal year ends and with low export allocations at even higher prices. Freight delays are also surfacing as shipping lines have stopped bookings at Russian ports and a lot of containers are stuck for returns. Ex-India billet bookings will happen if the conflict is prolonged, but both buyers and sellers are still assessing the new challenges,” the official said.
An official at a government run mill said that the imminent increase in the FOB price and delivery commitments are not the only aspects under consideration of buyers and sellers. There are uncertainties over the rising cost of cover for export credit risks from financial institutions, which when factored in could make the landed cost at destination prohibitive.
Trade circles have pointed out that the State Bank of India (SBI) has issued a circular to its clients stating that “no transactions involving entities, banks, ports, ships and vessels appearing on the US and EU sanctions list shall be processed irrespective of the currency in the transaction.”
Under these circumstances, it is no more just an issue of concluding a buyer-seller contract, but of verification and due diligence across a host of issues which might not all fall within internal competencies of an exporter, trade circles said.
A source at a southern India-based government run steel mill said it received a spot bid for 20,000 mt of prime concast billet for April delivery from Egypt, but added, “It is still under assessment as the bid is valid until March 10.”