While weak local demand for billets has kept prices under pressure in the Indian market, supply-side pressure is expected to ease at least in the short term following the shutdown of a blast furnace by state-run Rashtriya Ispat Nigam Limited (RINL) which the market estimates would result in a 5,000 mt output loss per day, SteelOrbis has learned.
At the same time, export contracts concluded during the past week have provided some slight support for local prices. According to market sources, an eastern India-based steel mill of Steel Authority of India Limited (SAIL) concluded an export booking of 30,000 mt for shipment to Southeast Asia. The deal level was at about $400-405/mt CFR.
The sources said that Chinese buyers have reported booking 40,000 mt with at least two producers in India for early November deliveries. Deal prices for China have been at about $405/mt CFR, as SteelOrbis reported last week. Most of the export bookings have been concluded at a lower end of $375-380/mt FOB.
Local Indian billet (grade IS2831- 100 mm x 100 mm) prices have moved marginally down during the past week by INR 100/mt ($1.4/mt) to INR 28,000/mt ($394/mt) ex-works, as weak domestic demand has persisted but a greater dip in prices was prevented by successful export contracts and expectations of a slight fall in availability, a traders said on Wednesday, September 2. “Local prices are critically linked to export shipments. It is still not clear whether export volumes will be sustained. Local billet prices will remain under pressures otherwise from the marginal softening of pig iron prices at the input stage and from fresh pressures on rebar prices on the value-added side,” an official with RINL said.
However, the sustainability of billet export volumes from India is questionable, market insiders believe. “A lot of Indian billet offers in markets like the Philippines and Malaysia are not finding any response due to the high volume of billets of other origins. It remains to be seen if Indian producers are able to sustain exports at aggressive prices in the coming week and this will largely determine the short-term local price trends,” a source said.
$1 = INR 71.06