India: SteelMint HRC export index increases sharply by $68/t on higher Chinese offers

SteelMint's Indian HRC (SAE 1006) export index stands at $1,038/tonne (t) FoB east-coast basis, up $68/t week-on-week (w-o-w) against $970/t FoB. Indian mills have sharply raised HRC export offers to $1,070-1,080/t CFR for Vietnam.

Deals concluded:

• A private steel-maker based in western India is heard to have booked around 10,000 t HRC yesterday to Vietnam at $1,055-1,060/t CFR for June-July shipments. Prior to this, a deal of around 20,000 t of Indian-origin HRC was concluded towards end of last week at $1,020-1,030/t CFR Vietnam for June delivery.
  
  

Factors driving up HRC export index :
1.After the the Chinese government announced the removal of the export rebate tax on HRC, export offers from China received a boost. This, in turn, resulted in a sharp hike in export offers from India

2. Indian mills have shifted their interest to overseas sales on higher export realisations. Despite increasing prices domestic, mills are gaining higher profit margins in exports, as domestic demand continues to remain weak amid lockdown restrictions.

3.Vietnam importers are actively procuring HRC for fear of further hikes in prices. Also, healthy downstream demand resulted in active export bookings from India.

Rationale: Nine indicative prices were considered as T2 inputs and one trade deal mentioned is considered as T1.The final price was an average of T1 and T2 inputs which stood at $1038/t FoB. The CFR prices were converted to FoB equivalent by deducting freight costs from the buyer/seller.

Global HRC market overview
1.Chinese HRC export offers hit new high:- Chinese HRC export offers continued to gain momentum and recorded an all-time high. Removal of the entire 13% export rebate by the government and robust demand in the country has also fueled the increase in export offers. Currently, the HRC (SS400) export offers stand at around $1,050-1,060/t FoB China compared to $1,000-1,010/t a week back.

2.Imported HRC offers to Vietnam rise sharply: Imported HRC offers increased by $50-100/t from major exporting nations.

• Chinese HRC offers were heard at $1,100-1,110/t CFR Vietnam, contrasted against $1,000-1,010/t CFR basis a week ago.
  
  
• Indian mills are offering at around $1,080-1,100/t CFR Vietnam, up by $50/t as against $1,010-1,020/t CFR a week back.
  
  

3. Formosa Ha Tinh increases HRC offers by $120/t m-o-m for July delivery: Tracking the consistent increase in imported HRC offers and robust domestic market demand, Formosa steeply raised its offers by $120/t m-o-m for July shipments.

• HRC (skin-pass) offers stood at $1,032/t CIF basis as against $910-912/t CIF for June delivery.
  
  
• HRC (non-skin pass) offers stood at $1,027/t CIF basis as against $905-907/t CIF basis for June shipments
  
  

4.Imported HRC offers to Pakistan increase sharply: Major Chinese steel mills are offering HRC at $1,050-1,070/t CFR Pakistan . Meanwhile, mills in Japan, Taiwan, and South Korea are offering at $1,130/t CFR.

5.Imported HRC offers to Nepal: Indian mills have announced fresh offers to Nepal at around $930/t ex-plant which translates into $950/t CFR Raxual border for June deliveries. However, no major deals have been concluded yet at increased offers.

Outlook- Indian HRC export offers are anticipated to remain high on higher export realizations as compared to domestic markets. Also frequent lockdown in various states of India and lower domestic sales may open opportunity for increased exports in near term