Rising inquiries from Nepal to boost exports from Indian secondary mills
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Nepal based mills are actively placing buying inquiries for billet & wire-rod, mostly to the mid-sized (secondary) mills. This is due to limited allocation by primary mills who produce steel through blast furnace route.
In addition to it, the local mills in Nepal reported that December to May is the peak season for the construction activities, hence their capacity utilization have increased to 60-70% than near to 20% during June-July.
Hence, with ramping up capacity utilization, Indian billet & wire rod demand is expected to remain robust in the coming months, which is likely to be passed-on majorly to the secondary mills, if the situation of non-availability of material persists among primary mills.
Recent deals, from the secondary mills are assessed at $530/t for wire rod & $470-475/t for billet on exw Durgapur, eastern India. Freight cost to Nepal via road delivery is reported at near to $25/t.
Also, a few export deals to Nepal (via rake delivery) for billets & wire rod are under negotiation by the central & eastern India based mills, which are likely to be settled in the next week.
From primary mills, a recent deal of only one rake of billet has been learned at $490/t exw, while indicative price of wire rod is reported at near to $570/t exw, eastern India. These offers attract freight cost of $20/t CPT to Nepal.
Why is the export allocation less among primary mills?
- Less capacity utilization in Q1 due to lockdown pushed exports. But with revival in domestic demand, mills lowered export allocations. For instance, Tata Steel exported around 1.19 mn t steel in Q2 FY'21 against 1.47 mn t in Q1 FY'21. Exports scaled down to 24% of overall deliveries versus 50% share in Q1.
- Jindal Steel & Power is planning to cut down its steel exports to 20% share of total sales. Revival in domestic demand has resulted in a lowering of the share of exports. During the lockdown, the company was exporting a 70-72% share of total sales.
- Strong domestic demand
- Better price realization in domestic trades (around INR 2,000 ($ 27) /t, than the exports
