Reacting to a near standstill in the local rebar market and a complete halt in commercial sales of billets to secondary steel mills, large Indian integrated steel mills have slashed their billet export prices during the past week to push higher volumes overseas in order to overcome rising inventories even after sizeable production cuts, SteelOrbis has been informed on Tuesday, March 31.
Large integrated steel mills have reduced their billet export offers by $15/mt from last week to $355-360/mt FOB. At the same time, deal prices have already fallen to $351-353/mt FOB. The revised export prices have further widened the spread between export price realizations and domestic prices, even though the latter have edged down further during the past week.
A southern India-based steel mill has concluded a deal for end-of-April delivery for about 25,000 mt to China at $351-353/mt FOB, which corresponds to about $365-367/mt CFR, according to sources.
A western India-based steel mill has reported a sale of 20,000 mt of billet at around $352/mt FOB, also to China, for early May delivery, market sources said.
State-run Steel Authority of India Limited (SAIL) has floated an export tender for 18,900 mt of billet and the tender is scheduled to close within the next 10 days so that shipment could be completed before port operations are further hampered and dislocated by the national lockdown.
The revived buying interest from China has been supported by the slight increase in trading activity in other key Asian markets, with an eastern region-based integrated Indian steel mill concluding a contract for end-of-April delivery of 10,000 mt at around $352/mt FOB. However, there has been no information about the identity of the country-buyer.
“The slashing of billet export prices seen over the past two consecutive week is an indication of the compulsion of integrated steel mills to aggressively push volumes overseas as merchant sales to secondary rebar producers have vanished since the lockdown came into effect and all construction came to a halt,” a senior manager at Jindal Steel and Power Limited said.
“On the positive side, Chinese electric arc furnace (EAF) mills are steadily increasing production, indicating a revival in demand for long products in that country. This has triggered higher demand for billets and imports. The point is that Indian exporters are concluding contracts at nominal export margin realizations in these very challenging times,” he added.
The complete disappearance of demand from secondary rebar producers has been reflected in the local billet prices of integrated steel mills, which have lost INR 300/mt ($4/mt) to INR 29,700/mt ($393/mt) ex-works and with no buyers even at lower levels, market sources said.
$1= INR 75.50