With local rebar demand and prices in India resuming a downtrend recently, large local steel mills were aggressively pushing billet exports to avoid increases in inventories of the semi-finished product and this was supported strongly by the fact that Chinese buyers became active in billet purchases. Billet prices in deals signed last week have been slightly higher than previous export transactions, but much lower compared to other suppliers, a fact which raised a lot of discussion in the market.
The recent tender prices for Indian billet for exports have been at $380-386/mt FOB, which corresponds to $410-415/mt CFR, including freight to China and some other expenses.
State-run Rashtriya Ispat Nigam Limited (RINL) successfully concluded an export contract through the tendering route for 30,000 mt of billet for January delivery. Though details of the contract were not officially disclosed, sources indicated that the highest bid was received at $380-385/mt FOB, and the targeted destination was China. Similarly another private steel mill located in eastern India concluded an export contract for 50,000 mt of billet for January delivery at a slightly higher offer price of $386/mt FOB. Both deals closed last week and traders will be trading it in China, sources said.
The price level in these tenders have been assessed by most market participants as too low in current market conditions, taking into account the last bookings for ex-Qatar billet at about $420/mt CFR and for ex-Vietnam billet at $425/mt CFR.
The major reason for such relatively low prices has been weak situation in the local Indian market, where quotations are still much below $400/mt. Local Indian billet prices have weakened by INR 250/mt ($3.5/mt) during the past week to INR 27,650/mt ($386/mt) ex-works, as mills have been attempting to increase commercial sales after reducing captive conversion to rebar.
“With Chinese buyers active in concluding import offers across exporting markets, Indian steel mills are aggressively pricing offers to overcome sluggish domestic rebar demand,” a manager at an eastern Indian steel company said, adding that Chinese traders have reported trades of ex-Iran billet at $410/mt CFR, pushing for lower prices.
At the same time, some traders said that they are hearing offers closer to $396-397/mt FOB from major integrated steel mills from India, while induction furnace-based Indian billet suppliers have voiced even higher numbers, at $400/mt FOB and above, which are unworkable at the moment. This means that Indian exporters are also trying to catch up the uptrend.
$1 = INR 71.50