SteelMint: Indian mills resume HRC export offers to select markets

• SteelMint’s India HRC export index resumes after two-week gap, at $730/t FOB
  
  
• Indian mills checking acceptance for boron-added HRCs post-export duty announcements
  
  
• Bid-offer disparity seen in Vietnam, Turkey and Middle East markets
  
  
• Absence of firm bids from Europe amid subdued demand
  
  

Indian steel majors have come up with offers in the overseas markets of Vietnam and the Middle East this week after a gap of two weeks, post-the export duty announcement. An important point to note is that the Indian mills are testing the overseas markets for acceptance of alloyed (boron-added) HRCs as these do not attract the 15% export duty. SteelMint’s India HRC export index was recorded at $730/t FOB east coast, contrasted against $821/t FOB level as assessed on 17 May 2022.

Market-wise highlights

1. Bid-offer disparity weighs on offers to UAE: Buyers have continued bidding lower at around $800/t CFR UAE while Indian mills have been indicating offers at $810-830/t CFR. Buyers have been largely on the sidelines, expecting mills to further reduce their offer levels. Chinese HRC export offers from major mills have, however, shown an increase of $15/t w-o-w to $840-850/t CFR. Easing of lockdowns in China, along with the government-announced stimulus packages, backed the increase in offers. However, buying continues to remain low in the Middle East markets at present.

2. Vietnamese buyers await domestic mills' price announcements: Vietnam-based buyers have continued to show higher preference for domestic HRCs since the beginning of the year. Buyers were heard to be delaying purchases and waiting for Formosa Ha Tinh and Hoa Phat to announce their prices for August and early-September sales, which are slated to happen in the next 7-10 days.

Logistical barriers, declining imported HRC offers and mainly the price cuts announced by domestic steel producers have lured buyers stay glued to domestic procurements. Buyers were heard bidding at $730/t CFR Vietnam, whereas indicative offers from India for boron-added HRCs stood at around $745-750/t CFR. Meanwhile, Chinese mills were heard offering HRCs (SAE 1006) at around $750-760/t CFR.

3. EU buyers stay muted: European Union (EU)-based buyers have also been showing limited interest in imported HRCs lately. Issues relating to opening of line of credits (LCs) and supply disruptions - fuelled by high power costs - were major demand dampeners. No offers from India were heard this week for the European markets.

Outlook
On 25 May, the General Office of the State Council in China announced that a combination of revitalizing of existing infrastructure and new investments are important for reviving the economy. Expansion of investment and reduction in government and corporate debt are of great significance. In the short term, despite weak off-season demand, market confidence has recovered, driven by policy measures to stabilize growth and control Covid. This has resulted in a marginal hike in China's steel export offers.

This is likely to support global steel prices in the near term, and which may bode well for Indian steel producers.