Indian integrated steel mills have been able to improve trades in the export market riding on more Chinese buyers seeking deals. But while ex-India offers have been submitted in the range of $600-610/mt FOB, confirmed deals were concluded at lower levels, particularly in the case of materials on offer through the tender route and with full advance payments, SteelOrbis has learned from trade and industry circles.
Ex-India billet prices according to SteelOrbis’ data are at $590-600/mt FOB this week, down by $10/mt compared to the previous week. While demand from Chinese buyers is seen to be rising in view of reported local shortages of semis and some improvement of purchases by re-rollers, actual deals have been reined in by caution over CFR valuations in view of freight rates rising from $75-80/mt to $90-100/mt since early this month.
State run steel producer Rashtriya Ispat Nigam Limited (RINL) floated an export tender for 30,000 mt of 150 mm billet and closed it at $591/mt FOB late last week, with the buyer being a Chinese trading firm. Moreover, early this week the same company held another auction for the same grade billet, which was also closed at $591/mt FOB, with the buyer a Dubai-based firm, which, however, is likely to sell this lot to China too later, as bids in the UAE are much lower. Both tenders were for 100 percent advance payment.
This would mean that buyers have been looking at landed valuations of $695-700/mt CFR China and Indian prices at below $600/mt FOB fit, if taking into account rising freight rates and traders’ margin.
Moreover, just today RINL has opened another tender for 30,000 mt of billet, also targeting China. “This is interesting that they came out with another 30,000 mt tender today after the last two sales. It means they are desperate to sell [seeing weak local demand],” a trader said.
SteelOrbis has also learned about smaller lots from India traded at even lower prices - below $590/mt FOB, but the quality of billet, sizes and payment conditions were not disclosed.
Another state-owned mill has been holding a tender for 16,000 mt of 125 mm billet this week, but it has not been closed by today. The mill’s target price was $625/mt FOB, but sources said that in the current conditions the highest possible sale price for 125 mm billet in the Philippines would be $685/mt CFR, and so it is definitely below $600/mt FOB. “They have a problem with their blast furnace, because of which hot metal output has been lowered. So there is only one allocation per month for now and that's why this time the quantity was 16,200 mt instead of the usual 18,900 mt. They are trying to maximise their realisation,” a market source commented.
“There is revival in buying from China on reports of fresh production cuts to be imposed on mills. Hence, the price of iron ore is falling and that of billet is rising. However, the rise in the landed price of imported billet is being checked by the rise in freight rates and buyers are setting stiff CFR valuations to conclude deals,” a source in RINL said.