Indian integrated steel mills have continued to slash billet export prices for the second consecutive week, responding to the sharp depreciation of the local currency, triggering an uptick in bookings by Chinese buyers although interest in other key Southeast Asian markets has remained muted, SteelOrbis has learned on Wednesday, March 25.
According to market sources, domestic integrated steel mills have lowered export prices by $10/mt compared to last week to $370-375/mt FOB to pass on the benefits of the weak currency to buyers and also to counter falling domestic billet prices, lower commercial sales to secondary rebar producers, and mounting inventories.
The sources said that two cargoes of about 30,000-40,000 mt of billet each have been sold during the past week by integrated steel mills to Chinese buyers for deliveries at the end of April and in early May.
Citing reports in the market, sources said one eastern India-based steel mill concluded a booking to China at around $372/mt FOB. Another western India-based steel mill concluded the second export deal, also with a Chinese buyer, at the slightly higher price of $375/mt FOB. The freight from India to China has been assessed at $20-25/mt.
Moreover, there have been reports that one more deal for Indian billet has been done at $380-385/mt CFR, but this information has not been confirmed by the time of publication. Most market sources believe that the deal has been concluded by a trader going short and that Indian mills have not been giving such a price so far.
Key buyers in Southeast Asia have not responded to Indian billet offers due to poor domestic long product demand and the weakening of most regional currencies during the past week, which more than offset the lower ex-India billet prices.
“Most Indian billet exporters are passing on the full benefit of the Indian currency falling to an all-time low at $76.15 to the US dollar to buyers. Chinese buyers returned to trading and made fresh bookings anticipating that steel mills would not gradually increase long product production and taking advantage of global billet prices trending lower,” a manager at Rashtriya Ispat Nigam Limited, a primary long product producer, said.
“Every exporter is attempting to push higher volumes but the total traded volume did not see a significant increase despite higher Chinese buying interest, as buyers in other Asian markets were largely disinterested,” he added.
Billet prices in the local Indian market have edged down INR 200/mt ($3/mt) week on week to INR 30,000/mt ($400/mt) ex-stockyard in reaction to the slight rise in mill-end inventories as secondary rebar producers had almost stopped procurement for rebar production with construction activities halting in several regional markets on government orders.
$1 = INR 76.15