SteelMint: India HRC export index falls to 5-month low in recent UAE deal

SteelMint's India HRC (SAE1006) export index fell by around $50/t w-o-w to $597/t FOB east coast as against $645/t FOB seen a week ago. These price levels were last seen in December 2022. Two deals were heard concluded recently to the UAE and Nepal at lower prices. Moreover, subdued demand in the Vietnamese and European market has also weighed on offers.

Rationale: One confirmed deal (T1) was reported in this publishing window. Nine indicative prices were considered as T2 inputs out of ten inputs received. The final price was an average of T1 and T2 inputs, which stood at $597/t FOB. CFR prices were converted to FOB by deducting freight costs from the buyer or seller.

Market-wise updates

1. Indian offers to UAE drop, at par with China prices: Indian exporters have lowered offers for hot rolled coils (HRC SAE1006) by $28/t to $632/t CFR Middle East (ME) as against $660/t CFR a week ago. In addition, an Indian steel major booked around 15,000 t of HRCs for exports to the Middle East for June delivery. The deal was closed at $630-635/t CFR last weekend, as per sources. Indian offers are now at par with those of China. Chinese offers to the UAE remained stable at around $620-630/t CFR w-o-w amid volatile futures. Indian mills have not been actively offering in the UAE market for several weeks, as buying interest has been limited due to Ramadan and Eid, followed by International Workers' Day. However, UAE buyers have turned active now.

2. Vietnam's imported HRC market slow: The Vietnamese imported HRC market was slow amid the Labour Day holidays in China. Imported Chinese-origin hot-rolled coil (HRC) offers into Vietnam dropped by $23/t w-o-w to $580/t CFR as against $600-605/t CFR. Post-holidays, when the market resumed, Chinese futures dropped sharply d-o-d. In addition, subdued demand in Vietnam also weighed on offers in the market. Hoa Phat reduced its monthly HRC (SAE1006, non-skinpasses) prices sharply by VND 1,700/kg ($70/t) for June and early-July sales. Post-revision, effective prices stand at $610/t CIF HCMC or VND 14,330/kg, excluding VAT. Vietnamese buyers are awaiting the price announcement of Formosa Ha Tinh which may be out in the next 7-8 business days.

3. EU HRC market silent: Indian HRC export (S275, 3mm) price indications fell by around $32/t w-o-w to $740-750/t CFR EU as against $770-780/t CFR a week ago. The market activity in the EU is mute due to sluggish demand and economic uncertainty. European mills have been reluctant in declining domestic HRC offers despite competitive import offers, claiming that they have healthy order books. However, buyers are still waiting for import prices to fall further.

4. Indian HRC export offers to Nepal drop sharply: Indian steel mills have reduced HRC export offers to Nepal by around $40/t to $660-670/t CFR as against $700-710/t CFR a week ago. An Indian steel major has booked around 6,000-10,000 t of HRCs for June deliveries at around $650/t ex-plant (equivalent to $670/t CFR Raxaul border).

Outlook: Production cuts in China's Tangshan city has resulted in an increase in domestic prices as well as futures. HRC futures for October delivery on the Shanghai Futures Exchange (SHFE) increased by RMB 171/t ($25/t) to RMB 3,799/t ($549/t) in the last two days, reaching the similar levels as in the pre holiday period. This, in turn, has created a lot of positivity in the market and participants are awaiting the sustainability of these prices.