SteelMint: India HRC export index drops further by $17/t on low buying interest

SteelMint's India HRC (SAE1006) export index dropped further by $17/tonne (t) to $773/t FOB east coast, with major mills reducing offers for the overseas markets. However, due to low buying interest, no active booking was reported.

Offers heard this week

• $790-810/t CFR Vietnam
  
  
• $815-825/t CFR UAE
  
  
• $825-830/t CFR Turkey
  
  
• $795-805/t CFR Raxaul border
  
  

Rationale: Twelve indicative prices were considered as T2 inputs, while an export deal of around 20,000-30,000 t at $790/t CFR Vietnam for Jan'22 delivery was reported as T1. The final price was an average of T1 and T2 inputs which stood at $773/t FOB. The CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.

Vietnam
Vietnam, the leading importer of Indian HRCs, has been showing a low buying appetite lately.

a) Majorly, imports into Vietnam were driven by demand in the European market, which has now slowed down.
b) Buyers are waiting for the price policy announcement from domestic mills like Formosa and Hoa Phat in the next couple of days.

The export volumes from India to Vietnam have been on a continual decline since Aug'21. Exports to Vietnam were recorded at 246,227 t in Aug'21, 131,635 t in Sept'21, 104,798 t in Oct'21, and further low at 61,119 t in Nov'21.

Europe
The import volumes into Europe have also taken a hit on various concerns :

a) Cargoes lying at ports awaiting clearances due to the quarterly quotas.
b) Automobile production remains impacted by the chip shortages which, in turn, has turned demand for imported HRCs subdued.
c) It is also concerned about the recent surge in Covid-19 cases after the emergence of the Omicron variant.

Resumption of offers from Far East
Japan, Korea and Taiwan have remained more aggressive in offering HRCs compared to Indian mills and had satiated much of the Vietnamese appetite in the preceding months of the year. Resumption of offers from these countries in the past few weeks when Indian mills kept their quotes higher has weighed on the export volumes lately even though offers are competitive at present.

Outlook
Export offers are likely to remain under pressure in the near term with demand-supply mismatch playing an upper hand. Tata Steel Ltd's planned maintenance shutdowns are likely to be over in the coming few days, while there will be an addition in volumes from the JSW Steel Ltd's Dolvi Phase-II expansion which got completed in the previous quarter. However, the buying appetite is likely to remain slow on the upcoming Christmas and New Year holidays and the winter season.