Large India mills have continued to push large volumes for export sales over the past week, facing declining domestic merchant sales, with secondary mills lowering the rate of conversion to construction grade finished steel. But despite aggressive export initiatives by these mills, export margins have remained below expectations amid a softening of demand across key Asian and Middle Eastern destinations, SteelOrbis learned from trade and industry circles on Wednesday, June 3.
Sources said that ex-India billet offers have been maintained at $470-480/mt FOB, but most of the deals confirmed were done with some discounts, while sellers are expected to continue to place export offers due to oversupply of semis in the local market.
The sources said that the previous large tender for 60,000 mt of 150 mm billet was closed at a higher level than discussed last week, but lower than the mill’s target. The final price was confirmed at $475/mt FOB, which is above $460-470/mt FOB seen in number of bids, but lower than the target set by the mill at $480/mt FOB. The final destinations for these volumes will be Saudi Arabia and the UAE, market sources said.
Another tender-based offer for 30,000 mt but for SAE billet was less successful, and there has been no confirmation of whether the producer agreed to sell at $10/mt below the targeted level.
Despite some difficulties in sales abroad, the same seller has followed up floating another export tender of a similar volume of blooms scheduled to close later this week, with sources claiming it to be an indication of aggressive liquidation of mounting inventories of semis not being absorbed in the local market.
The trend is reported to be similar in export spot sales too. An eastern India-based integrated mill has been in negotiations at $465-468/mt FOB, sources said.
The SteelOrbis reference price for Indian billet has settled at $465-475/mt FOB, up slightly by $2.5/mt on average over the past week mainly because of the higher-than-expected result of the tender for 150 mm billet disclosed this week.
“Indian billet exporters are settling deals at prices lower than official offers due to competition. This is the imperative in attempting to balance inventories at a time of declining local finished steel prices and the resulting lowering of the conversion rates of secondary mills,” a source at a mill said.
“The current export conditions reflect a balancing of soft demand and excess supplies. But we see two set of headwinds likely to temper exports moving forward: the rising cost of production which will limit sellers' ability to continue to absorb declining realizations, and continued challenges in concluding trades in the Middle East,” he added.
Billet trade prices in the local market continue to remain under pressure from oversupply. Billet prices have lost INR 500/mt ($5/mt) to INR 41,800/mt ($439/mt) ex-Mumbai and are down INR 300/mt ($3/mt) to INR 38,300/mt ($402/mt) ex-Raipur in the central regional market.
