SteelMint: India HRC export trade subdued, index falls by $10/t w-o-w

SteelMint's India HRC (SAE1006) export index fell by $10/t w-o-w to $685/t FOB east coast against $695/t FOB seen a week ago.

Several factors led to the drop. There was limited trading activities in the Middle East due to Eid holidays. Prices in the Vietnamese market have plunged due to dull buying interest from domestic and overseas markets. In addition, poor demand in the European Union has weighed down sentiments in the Indian HRC export market.

Market-wise updates

1. Competitive offers from China weigh on UAE sentiments: Indian exporters are not actively offering in the UAE market with recent price indications for hot rolled coils (SAE1006) at around $720-730/t CFR, down by $10/t w-o-w. China has again lowered its offers by $5/t to $660/t CFR amid sharp decline in the SHFE HRC futures. Thus, Indian offers in the UAE market are unviable. Moreover, due to Eid, UAE buyers were in a holiday mode and trading activities had slowed and they are yet to make a comeback.

2. Vietnam's imported HRC offers plunge: The Vietnamese HRC market has plunged amid continuous decline in Chinese steel futures. Chinese mills dropped HRC (SAE1006) offers by $15-20/t to around $600-605/t CFR Vietnam this week. In addition, Vietnamese steel major Formosa Ha Tinh is offering a rebate of around $40/t m-o-m for June 2023 shipments over the prices announced earlier this month. On 14 April, official offers announced by the company for HRCs (SAE1006, skin pass) stood at $692/t CIF Ho Chi Minh City. Meanwhile, non-skin pass coils were assessed at around $682/t CIF.

3. Subdued EU demand keeps prices flat: Indian HRC export (S275, 3mm) price indications remained unchanged w-o-w at $780-800/t CFR EU this week. However, some unconfirmed price indications were heard at $740-750/t CFR, but this could not be confirmed from the supplier's end. Moreover, trading was quiet in the European market amid limited bids as buyers are in wait-and-watch mode against the backdrop of negative global market sentiments. Chinese HRC offers dropped sharply by around $50/t this week but, even then, trade activities were absent from the market.

Outlook: Market sentiments have turned negative amid the sharp decline in Chinese steel futures. Chinese HRC May 2023 contract on SHFE settled at RMB 3,813/t ($553/t) as on 24 April, down RMB 184/t ($27/t) w-o-w against RMB 3,997/t ($580) a week ago. On the other hand, the UAE market has slowed down due to Eid holidays and is expected to resume this week.

Notably, the average daily crude steel output of CISA-affiliated mills stood at 2.29 mnt in mid-April, down 1.38% compared to mid-March. But, Chinese domestic HRC prices inched up by RMB 20/t ($3/t) today. It remains to be seen whether the curtailment in Chinese crude steel output will support Chinese prices.