Fresh pressures have emerged on ex-India billet export prices from new waves of the pandemic in some regions in China and uncertainties about production cuts in the country in the second half of the year, putting great pressure on prices. A number of Indian mills have failed to close tenders this week, receiving bids which were too low, but at least one contract for 150 mm billet was confirmed as having been done at a much lower price level this week, SteelOrbis has learned from trade and industry circles.
The upward momentum in ex-India billet prices seen earlier this month was nipped in the bud, with Chinese buyers declining any valuations above $700/mt CFR basis. Local exporters, in reaction, were generally seen to be holding the price line, but amid falling trading activity some integrated steel mills reported concluding deals and seeing the current tradable price level at $610-615/mt FOB, compared to $630-645/mt FOB during buoyant market conditions a week ago.
Sources said that RINL which had floated two spot e-export notices for an aggregate of 30,000 mt of 65 mm and 90 mm billet received the highest bid averaging around $620-625/mt FOB on August 4 (Wednesday), although the final sales contract is yet to be signed between the buyer and the seller. Nevertheless, as the billet sizes in this tender were not common, the price could not be assessed as being the current market level, sources said. At the same time, the second tender of the same producer for at least 30,000 mt of 150 mm billet was canceled, according to a number of sources, due to very low bids, which did not exceed $600/mt FOB. Last week, RINL managed to sell at a price above $625/mt FOB.
Another state-owned mill, SAIL, also failed to close its tender for 19,000 mt of 125 mm billet this week due to falling price valuations.
“Until last month, the export market for semis was looking very positive. With China’s liquid steel output slated to fall in the current year, the demand outlook for imported semis was very strong. But the fresh wave of the pandemic spreading across China and other Asian regions has changed the situation and sentiment among importers is negative. The prospects for a revival will depend on how the new pandemic wave moves and how steel prices recover,” an official from the major Indian billet exporter said.
“However, local steel mills are slightly better placed to avoid inventory build-up risks as local sales are showing signs of improving,” he added.
Among the private sector, an Odisha-based steel mill reported a trade for about 25,000 mt with a Singapore-based trading firm with the final destination said to be China at a price of $610/mt FOB for end-September shipment, sources said. This is much lower than $640-645/mt FOB, tradable as the highest last week. This price level of $610/mt FOB corresponds to about $690/mt CFR China or slightly above.
Meanwhile, in the local market, billet prices have strengthened for the second consecutive week, moving up by INR 800/mt ($10/mt) to INR 42,000-42,200/mt ($566-568/mt) ex-works, sources said.