Indian mills increase HRC export offers by $20-25 for Vietnam as demand surges

Indian mills have sharply raised HRC export offers for Vietnam by around $20-25/t w-o-w on bullish global market trends. Indian mills have announced a steep hike in HRC export offers to $800/t CFR Vietnam for May shipments, sources have reported to SteelMint. Indian mills continue to prefer Vietnam due to ambiguity on Chinese export rebate cuts & higher offers from Japanese/Korean mills.

• Last week, an Eastern India based mill concluded a deal of around 20,000 t HRC at around $780/t CFR Vietnam, sources highlighted. However, now the Indian mill is eyeing higher HRC export offers to Vietnam.
  
  
• A few days back, a major private steel mill based in Eastern India concluded a deal for 30,000 t HRC at $760/t CFR Vietnam basis.
  
  
• SteelMint learns that Chinese tier-1 mills have also raised HRC export offers to Vietnam at $780/t CFR which was around $760-770/t CFR basis last week.
  
  

Why Vietnamese re-rollers prefer Indian HRC over China?

1. Export rebate cuts pose risk- Possible rebate cuts to 9% from the current 13%, or excluding the entire rebate margin has prompted higher offers from Chinese mills. The Chinese Govt. is planning to make this move to curb steel output, decrease exports and utilize the material domestically. Due to these measures, few mills have introduced a new clause of loss to be borne partially or fully by the buying party in case the rebate cut is enacted by the government. Thus, Vietnam re-rollers are ready to procure HRC from India at higher prices due to the huge risk involved in booking HRC with Chinese mills.

2. South Korean and Japanese mills continue to offer HRC at a premium- The Japanese and South Korean manufacturers are offering HRC to Vietnam at premium prices. Currently, Japanese mills are quoting around $805/t CFR and Korean mills at $820/t CFR basis. This has given the Indian mills an edge to offer attractive prices to the Vietnam market.

3. Indian mills continue to explore the export market- Mills are highly interested to export HRC to overseas nations at higher offers due to tepid sales in local markets. Higher realization in exports and lower domestic prices resulted in increased HRC exports from India. Indian mills have managed to book significant volumes of HRC to Vietnam since the beginning of Mar'21.

Near term outlook- Improved demand in the downstream sector has prompted Vietnam rollers to actively procure HRC from exporting nations. Thus, due to increased consumption in Vietnam, Indian and Chinese mills will continue to increase HRC export offers in the near term.

Vietnam's steel giant Hoa Phat Group has reported steel pipe sales volume at 53,200 t in Feb '21, an increase of 11% year-on-year. Domestic downstream demand in Vietnam seems to be strong which is likely to keep imported HRC prices supported in the near term.