Indian mills target $1,100/t CFR for HRC exports to Vietnam

Indian mills are offering HRC for exports at around $1,100/tonne (t) CFR Vietnam which were at around $1,070-1,080/t CFR a week back. However, no deals were heard to have been concluded at quoted offers, SteelMint understands. Last week, Indian mills collectively booked around 40,000 t of HRC to Vietnam at around $1,070-1,080/t CFR basis for June-July shipments. Chinese mills like Rizhao etc are currently offering HRC at $1,080-1,090/t CFR Vietnam. Meanwhile, there were no offers heard from South Korean or Japanese steel manufacturers.

Reasons driving HRC export offers from India

1. Higher realisations for Indian traders from HRC exports- Following the trend, Indian mills have sharply raised their HRC export offers to Vietnam for June-July deliveries. Mills are gaining higher profit margins in exports over domestic prices thus raising prices weekly. Imported HRC offers to Vietnam surged by $155/t m-o-m from India.

2. Subdued demand in the domestic market- Market sources based in India shared with SteelMint that major Indian steel mills are offering limited quantities of HRC in the trade market (local market in India) for sale due to sluggish sales amid announced lockdown in India to curb the spread of the virus. India's domestic steel consumption was at 6.725 mn t in Apr '21, down 26%s month-on-month (m-o-m) against 9.052 mn t in Mar '21, according to provisional data released by the Joint Plant Committee (JPC).

3. Vietnam remains the most preferred destination for exports from India- As per bulk HRC export data maintained with SteelMint, Vietnam imported around 35,000 t of HRC in April from India. Due to the exhaustion of the HRC quota in Europe and Ramadan holidays in the UAE, mills are keen on exporting HRC to Vietnam. Also, importers in Vietnam are interested in procuring the material from India on healthy downstream demand.

Outlook-

Imported HRC offers are expected to witness some correction in the short term due to the following reasons:

• SHFE HRC futures fell by 3%, in today's session. The SHFE HRC futures Oct contract closed at RMB 5,949/t (-186/t).
  
  
• Chinese crude steel output touched new highs at 97.85 mn t in Apr '21, up 4% m-o-m against 94.02 mn t in Mar '21, as per data released by the National Bureau of Statistics (NBS).
  
  
• Vietnam steel imports stood at 1.35 mn t, down by 6% in Apr'21 as compared to Mar'21, according to data published by customs in Vietnam.
  
  
• Importers have slightly shifted their buying interest to the domestic market and are preferring offers quoted by Formosa Ha Tinh and Hoa Phat.