Indian billet producers have kept increasing their local billet prices and expect demand from overseas customers to improve soon, especially demand from China.
Market sources said that local Indian billet (grade IS 2831 - 100 mm x 100 mm) is up INR 450/mt ($6/mt) over the past week to INR 30,250/mt ($421/mt) ex-stockyard.
Official export offers of most large integrated steel mills are at $435-440/mt FOB. However, this level is still not workable in the international market and most sources said that the real market level is unchanged at $420-425/mt FOB. Exporters will benefit from the Indian currency weakening to INR 71.80 to the US dollar over the past week from INR 71 to the dollar, while currency dealers predict the currency will breach INR 72 to the dollar over the next week in response to the geopolitical crisis over Iran and surging crude oil prices.
“Billet exports are expected to get stronger. More re-rollers in China are getting back into higher production levels and buying interest for ex-India billets can only improve from current levels,” a manager at Jindal Steel and Power Limited (JSPL) said. There have been a number of enquiries heard from Chinese customers this week for 20,000-30,000 mt each, traders from Asia said. However, at the moment bid prices are still very low, at $430-435/mt CFR, which is in line with the contracts signed in mid-December. As a result, it is possible that Indian mills will have to give discount to get the orders, because $420-425/mt FOB from India corresponds to $440-450/mt CFR China.
“We are keeping our export offers stable closely watching the market and how prices move and buyers’ willingness to absorb higher prices. We shall take a call on adjusting export offers accordingly over the next few weeks,” an Indian mill source said. “The challenge for suppliers like us is that buyers in key markets like China and Southeast Asia are demanding extremely tight delivery schedules for end-February deliveries and difficult to meet with logistical and port traffic, particularly in eastern India,” he added.
State-run Steel Authority of India Limited (SAIL), which already has a tender opened in the previous week for export of 10,000 mt of billets, floated its second export tender for a similar volume of 10,000 mt with bids invited over the next two weeks, market sources said. Moreover, RINL will close its tender for export of 30,000 mt of billet this week.
Sources from India said that a southern India-based mill completed a contract for early March delivery of 15,000 mt of steel billets at $434/mt FOB, but this level has not been confirmed by customers in Asia and sources said that the deal was a part of a year-long supply commitment for 200,000 mt.
$1 = INR 71.80