The unprecedented spurt in prices in the local Indian billet market over the past week and the bullish Chinese steel market have prompted Indian integrated steel mills to rapidly increase export prices, but higher margins from domestic sales have kept export bookings on hold, sources have told SteelOrbis.
Market sources said that billet prices have skyrocketed by INR 1,800/mt ($24/mt) in the local Indian market to INR 32,000/mt ex-works on the back of the steady rise in demand and the increase in direct reduction iron (DRI) prices in the local market.
The strengthening of domestic billet prices has pushed up billet export prices to $440-450/mt FOB, up from the workable price level of $425/mt FOB last week. Very rare offers from big mills have been heard at $460/mt FOB, while the price level of $440-450/mt FOB has been assessed mostly as an indicative price level and the level of offers from small suppliers. But big integrated mills and exporters have been unwilling to book any visible volumes in view of the low exportable surplus available in January-February and higher consumption by captive rolling mills or given the higher margins from local merchant sales to secondary rolling mills, the sources said.
“Chinese steel prices - finished and semis - are rebounding strongly. But buyers in the key Southeast Asian market are cautious and trading is muted as the billet price of around $470/mt on CFR basis is considered too high by customers,” an official from Jindal Steel and Power Limited (JSPL) said.
“In the local market, producers have no economic compulsions to ship semis overseas. Their own rolling mills are operating at high capacity utilizations levels and margins are very attractive in view of tight supplies and high prices,” he added.
According to market sources, firm offers at $440/mt FOB or even higher are mainly from induction furnace mills in India, “but they are fully booked until December, and not considering January orders now,” an Asian trader said. SAIL has not been offering any allocation to the export market, partly due to an issue with their blast furnace. RINL has also not given any new offers and, according to sources, the producer has even been delaying shipments of some November production cargos to December.
$1 = INR 74.20