Having successfully concluded deals for semis at higher prices, Indian integrated steel mills have been aggressively increasing tonnages on offer during the past week, leveraging the sustained buying interest particularly among Chinese customers, SteelOrbis has learned on Wednesday, May 20.
The traders said that, having significantly reduced conversion to rebar, most steel mills have been banking on export of semis - billets, blooms and slabs - to economically maintain plant capacity utilizations at lower levels even as the domestic sales and market outlook remains extremely negative.
Ex-India billet export prices in deals increased by $2-5/mt to $365-370/mt FOB last week and at least one new transaction has been heard at a higher level, at above $375/mt FOB, this week.
Market sources said that the a billet export tender for 30,000 mt received highest bids in the range of $365-368/mt FOB from China. Also, in the middle of last week, another mill sold a billet cargo at slightly below $370/mt FOB.
An eastern India-based private steel mill has concluded a billet export tender for 45,000 mt for early July delivery at $369/mt FOB with a Singapore-based Chinese trader, with sources claiming that the mill had already started negotiating a ‘follow-on’ booking for an additional 35,000 mt for July delivery.
In just over the past three working days, the number of export tenders floated by steel mills has witnessed an increase along with tonnages on offer. Sources said that Steel Authority of India Limited (SAIL) has floated an export tender of 20,000 mt of billet along with a tender offering 40,000 mt of bloom. On an earlier date in the past week, SAIL had floated an export tender of 30,000 mt of slab.
Rashtriya Ispat Nigam Limited (RINL) has announced spot export sales of 60,000 mt of blooms, which sources said was one of the largest export volumes in recent months by a state-run steel mill. According to the sources, the decision to resort to spot sales was ‘unusual’ for government-run companies and this is an indication of producers moving in fast to leverage current strong prices of semis and liquidate excess inventories in lieu of rebar conversions.
There has been a report in the market that a new deal for ex-India billet has been signed at about $390/mt CFR, which corresponds to $375-378/mt FOB, though it has not been confirmed by the seller’s side by the time of publication. Nevertheless, most sources believe that it is the tradable value for Indian billet now in China, as mills are targeting $390-395/mt CFR and suppliers from other countries have already managed to achieve higher deal prices.
“Chinese buyers can absorb higher prices. But delivery timelines are key to competitiveness. Indians steel mills can ensure faster deliveries compared to ex-CIS or ex-Iran billets, which will be key in our ability to keep increasing export prices in small increments,” a billet exporter told SteelOrbis.