Indian billet producers have failed to keep selling sizable volumes abroad over the past week, because Chinese customers have been reluctant to accept current offers due to the reduced gap with local quotations, while buyers in Southeast Asia have been insisting on lower prices. Although local billet prices in India have continued to go down so far, it is unlikely that suppliers will provide large discounts in the near future due to some revival in rebar demand in India, SteelOrbis has learned.
Billet export offers from Indian mills are still at $375/mt FOB, the same as last week, but major sellers have been forced to postpone tenders due to low bids. One Indian mill said that enquiries for its export tender will have to be submitted by November 12.
Traders have attributed lower export opportunities over the past week largely to China’s inactivity. “Ex-India billet offers to China at $375/mt FOB will need to be looked at again as there is resistance to such offers from buyers due to not so high local prices. Ex-Iran billets are getting more competitive,” a manager at Rashtriya Ispat Nigam Limited (RINL) said. Most offers from India are equivalent to $405/mt CFR China, still cheaper than local billet. Customers have been cautious in purchases from abroad, seeing a gradual decline in the domestic market over the last week, but this week prices in China have started to rise, signaling that the import activity may improve in the near future.
“I feel that the fall in billet exports during the past week is only temporary. Chinese billet prices are largely stable and Indian exporters are reassessing their export pricing and their option to adopt more aggressive pricing to keep pushing volumes to China,” a source said.
Local Indian billet prices (grade IS2831: 100 mm x 100 mm) have continued to seek lower levels for the second consecutive week, losing INR 200/mt ($3/mt) to INR 28,100/mt ($397/mt) ex-works, largely amid a lull in the export market even though the outlook remains stable, traders said on Wednesday, November 6.
Despite the losses in local prices over the past two consecutive weeks, downside risks are limited as large integrated producers are expected to reduce commercial sales of billets to re-rolling mills and focus on captive conversion to rebar, as the prices of the latter have been improving over the past week.