Falling Chinese rebar futures weigh down Indian billet export sentiments

The recent decline in Chinese steel futures have turned the global billets market subdued again. According to data maintained with SteelMint, the Chinese rebar futures contract for Jan'22 delivery closed at RMB 5,421/t ($841/t) on 13 Oct'21, a sharp decline of RMB 329/t ($51/t) against the closing of last week.

According to recent reports, steel mills in more northern cities were also asked to cut production from 15 Nov'21 to 15 Mar'22 next year to meet steel output reduction targets, according to China's industry and environment ministries.

Following the drop in futures, domestic billet prices also fell. Steel billet prices in China's key steel-making province, Tangshan, stood at RMB 5,250/t ($814/t), inclusive of 13% VAT, on 13 Oct'21, falling by RMB 50/t d-o-d.

Recent Indian billet export tender fetched subdued response: The Indian billets exports market continues to remained under stress post-Chinese holidays too. Recently-held billet tenders would not be able to fetch the desired numbers wanted by Indian billet makers.

"Re-bar futures have fallen considerably in the past two days in China. Price expectations of $640-645/t FOB levels look less workable at the moment from India," highlighted a trader source.

An Indian PSU had floated an ocean sale export tender for 20,000 t of steel blooms (150x150mm, 4SP/5SP grade) which could not get concluded owing to disparity between bids and company expectations. As per sources, bids were received at around $625-630/t FOB and expectations were around $650/t FOB.

State-owned Vizag Steel floated an export tender for spot sale of 30,000 t of steel blooms (150x150mm, 3SP/4SP grade). The tender was floated against 100% advance payment terms within five banking days, with the due date being 12 Oct'21. The shipment is scheduled within 45 days from the export agreement.

Active tenders

Vizag Steel, a state-owned steelmaker, issued a sale tender for export of 2,709 t of billets, blooms and wire rod coils to Nepal, as per SteelMint reports. The shipment is scheduled for end-Nov'21. The due date of submission of bids is 18 Oct'21. At present, rake delivery to Nepal is only taking place through the Jogbani, Raxaul and Sunauli land customs.

Indian domestic rebar prices hovering at over a decade high

Indian rebar prices have been escalating. Up to the period that SteelMint has been tracking, show that prices touched over 10-year highs recently. Secondary (induction furnace-route) mills' prices are currently at around INR 53,900/tonne (t) ($715/t) exy-Mumbai.

SteelMint's daily steel billet index is assessed at INR 48,800/t exw-Raipur on 12 Oct'21. Considering higher realisations in the domestic market, chances are grim that mills may settle for lower export prices, SteelMint expects.