Indian HRC export offers continues to remain on hold amid sluggish global market sentiments

Indian steel mills are continuing to hold their export offers to Southeast Asia and the Middle East amid maintenance shutdowns. These were necessary because of weak domestic demand and unviable export pricing. The maintenance shutdowns translated into production cuts and led to lower export allocations. In any case, the lower Chinese offers are making it difficult for Indian mills to compete. This scenario has been compounded by weak global demand, and a summer lull in key markets like Europe and the Middle East. On the other hand, the production cuts helped mills to keep their domestic prices well above Chinese export offers. All these factors have been leading to a quiet export market for Indian hot rolled coils (HRCs) for the time being.

Market updates

1. ME imported HRC offers drop w-o-w: Chinese HRC export offers to the Middle East dropped by $5/tonne (t) w-o-w, settling at around $545-550/t CFR UAE, down from $550-555/t in the previous week. The price drop aligns with a sharp fall in futures. Despite this, a deal of approximately 3,000 t was heard concluded at $540/t CFR UAE. Imported HRC offers from Japan remained steady at $555/t CFR UAE. Whereas, Indian mills have continued to hold HRC export offers to ME due to higher domestic realisations.

2. HRC import offers for Vietnam stable w-o-w: Imported offers of China-origin HRC (SAE1006) into Vietnam remained stable w-o-w at $520-525/t CFR HCMC for the week. Moreover, low demand and bearish market sentiments still persist in the region. Prices remained stable amid competitive domestic prices in Vietnam along with declining prices on China's Shanghai Futures Exchange (SHFE). SHFE HRC futures edged down by RMB 35/t ($5/t) d-o-d to RMB 3,612/t ($496/t) as compared to RMB 3,647/t ($501/t) a day ago. Moreover, the same fell sharply by RMB 117/t ($16/t) against RMB 3,729/t ($513/t) last week.

3. Mills hold back HRC offers to EU: Indian steel mills are not actively offering to Europe currently. Last heard offers were at $650-660/t CFR Antwerp. In addition, prices for European HRCs have remained largely stable in the domestic market amid seasonally slow trading activities. The market is still facing weak demand, although domestic mills aim to increase prices after the summer break. However, a rebound in consumption is unlikely, indicating that the market may not be ready to support higher prices.

Outlook

Indian HRC exports may continue to remain on hold due to weak global demand and competitive pricing from China. Moreover, offers to Europe face challenges due to the summer slowdown and stagnant prices. In case there is a rebound in European demand after summer, Indian HRC exports may find some support.