SteelMint: Mills hold back HRC export offers; index unchanged w-o-w

• SteelMint's India HRC (SAE1006) export index unchanged w-o-w at $518/t FOB
  
  
• Mills hold back offers amid bid-offer disparity
  
  
• Increased competition seen from China
  
  
• Buying interest low compared to offers
  
  

Indian mills were heard to have held back from quoting offers this week to the traditional markets of Vietnam and the UAE. Bids have been steeply lower as compared with the offers mills had floated earlier.

On the other hand, domestic market prices for hot rolled coils (HRCs) in India are above the levels being quoted on the overseas trade platform. For instance, SteelMint's benchmark assessment for HRCs (IS2062, 2.5-8mm) as on 10 November 2022 stood around INR 56,000-56,500/t ($591-597/t) exy-Mumbai, excluding GST @ 18%.

Rationale: Four indicative prices were considered as T2 inputs, while there were no deals reported under T1. The final price was an average of T1 and T2 inputs which stood at $518/t FOB. CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.

Market highlights:

1. Vietnam mills cut production; price announcements expected soon: Vietnamese steel producers have started to cut down their production to counter the slow construction activities in the country and lacklustre overseas demand. Hoa Phat had shut operations at two blast furnaces each in Dung Quant and Hai Duong plants. Also the mill is mulling suspension of one more BF at the Dung Quat plant. Formosa  has cut its crude steel production by 15%, SteelMint learnt from media reports.

Also, domestic mills are to make their price announcement for January and early-February sales in the upcoming days.

Moreover, there are very few exporting countries quoting offers this year which has reduced competiton in the imported HRC market. A few Chinese mills were heard to have quoted HRC (SAE1006) export offers at $550/t CFR Vietnam, up from the previous week's $500-510/t CFR levels. Whereas a few others have held back offers amid rally in HRC futures market. 

Last heard, offers from Indian mills were around $555-565/t CFR Vietnam, a week back.

2. Buying interest stays low at sub-$540/t CFR in UAE: Bid-offer disparity is still a concern for exporting countries in the UAE market. "There are very few buyers in the market at present and the ones that are trying to source HRCs are bidding below the $540/t CFR levels," sources informed SteelMint.

Chinese HRCs are heard being offered at around $575/t CFR, up from the previous week's indications of $550-560/t CFR. Last heard indications from Indian mills were at around $560-580/t CFR levels.

3. European market remains lacklustre: Buying interest is still low from the major steel consuming sectors of construction and automotives in the EU. Elevated gas and electricity prices and alloyed HRCs are a major setback for Indian mills in the region. Last week, Indian HRC (S275) export indications were heard at around $630-640/t CFR Antwerp. No firm bids were received from the market, sources informed.

Near term outlook:
Indian mills gauging the overseas market are to come up with fresh offers or indications in the next week. The recent increase in offers from China might push offers from India in the near term, opined a few industry participants.