Indian HRC export prices hit a seven-month high in recent deals

Indian HRC export prices hit a seven-month high increase by $10 in recent deals

Indian HRC export prices records seven months high. Similar price levels were last seen in the month of Feb'20.Meanwhile Indian steel mills increased HRC export offers further by $10/t in recent deals concluded at around $535/t CFR basis for Oct shipments, against the last bookings which were reported in the range of $525-527/t CFR basis for Sep end shipments.

Recent HRC (SAE 1006) trades -

• 10,000 t Indian HRC booked at $535/t CFR Vietnam basis for Oct deliveries by a private mill in southern India
  
  
• 25,000 t HRC booked for at $535/t CFR UAE for Oct deliveries by southern-based private steel mill
  
  
• Another deal of around 20,000-25,000 t HRC booked for exports in two lots at $535/t CFR UAE by eastern-based private steel mill for end Oct -early Nov deliveries
  
  
• 25,000 t HRC to deal concluded at $545/t CFR Italy basis by southern-based steel mill for Oct end Nov deliveries
  
  

Factors driving Indian HRC export offers:
1. Domestic price gains- Indian steel manufacturers have increased HRC prices by INR 2,000/t ($27) for Sept'20 deliveries. Prices have moved up on the back of supply concerns due to maintenance shutdowns and hike in global steel prices. Notably, at the beginning of Aug '20, Indian steel mills lifted prices by around INR 2,000/t followed by the second hike of INR 500-1000/t and the third hike of INR 1,000/t on limited supply and restocking demand among traders.


2. Hike in global HRC offers- Global HRC offers increased by around $15-20/t w-o-w from major exporting nations. China is offering HRC around $535/t CFR Vietnam which was $520/t.Japanese and South Korean mills have increased offers to $540/t CFR Vietnam against $520/t last week.

Meanwhile "Vietnam buyers are accepting HRC (SAE1006,re rolling grade) offers close to $540/t CFR, shared by major HRC importer based in Vietnam.

3. Improved domestic sales will limit export allocations- Govt owned SAIL recorded decline in its export volumes to 0.19 mn t in Aug'20 which was 0.31 mn t in the previous month.

Meanwhile, another major steel producer,JSPL recorded export sales at 42% of the total sales volumes in Aug '20."The company's steel export volumes have come down significantly with an increase in domestic sales post the lock-down period", shared by Mr. V R Sharma, MD JSPL said in a statement

Also, as per bulk HRC export data maintained with SteelMint, Indian HRC exports stood at 762,395 t in Aug'20 fell by 33% against 1,129,548 t in Jul'20

Meanwhile, few mills are likely to undergo maintenance shutdown which may keep supplies tight in the near term.

4. Indian auto demand likely to rebound- The Indian automobile sector has witnessed strong sentiments from rural and semi-urban markets and a rise in preference for personal mobility on the back of gradual normalization in the supply chain. Maruti Suzuki (MSIL), has reported 17.1% (y-o-y) growth in its Aug sales and is ramping up its supply chain to build inventory at dealerships as it expects demand to sustain and get stronger as the festive season approaches.

5. INR appreciation against $- Today, INR appreciated to 73.2 against $, versus over 74.8 in mid-Aug'20. This, in turn, pushed mills to raise export offers in the global market.