Indian billet export market silent on wide bid-offer spread

The Indian billet exports market remained silent on high bid-offer disparities. The two state-owned mills floated export tenders for around 48,000 tonnes (t) of blooms and billets which were due on 4 June'21. According to SteelMint sources, the tenders received bids in the range of $590-600/t FoB, while mills are not ready to sell below $620/t FoB.

During conversations with market participants, SteelMint learned that the volatile Shanghai Futures Exchange (SHFE) rebar futures market, supported by new guidelines issued by Chinese port authorities for Indian cargoes, resulted in the high bid-offer disparities.

"Amidst new guidelines, Chinese buyers are not assured enough whether they will get deliveries on time or not", said a reliable market source.

Even the cargoes which had been booked earlier are now being redirected to other markets.

Futures market continues upward trend: Since last week, the rebar futures market continued an upward trend. However, marketmen still believe that it (the futures market) is yet to gain stability. According to data maintained with SteelMint, the SHFE rebar futures Oct'21 contracts on 9 June'21 settled with a day-on-day (d-o-d) rise of RMB 31/t ($5/t) to RMB 5,035/t ($788/t).

On the other hand, the physical market is not rising parallelly with the futures market. For instance, Chinese domestic billet prices in the Tangshan market opened with a rise of RMB 20/t ($3/t). However, they fell by RMB 70/t ($11/t) on 8 June '21. Currently, the same are at RMB 4,960/t($777/t) ~ $670-675/t CFR China. Hence, Chinese buying indications are still at $670-675/t CFR this week as well.

High freights impeding Indian deals: This week, SteelMint assessed Indian billet export prices at around $615/t FoB. These are reasonable compared to those of Russia and Iran. However, the high freights supported by new port guidelines in China for Indian cargoes are impeding Indian export deals. According to SteelMint's sources, the freight for China from India is heard at around $60-70/t.

On the other hand, western India-based mills are heard having sold 1,000 t of billets in the African region at $635/t, FoB Kandla.

SteelMint's bi-weekly assessment for Indian billets (150*150mm, BF-route, FoB east coast), published on 8 June'21 was $610-615/t.