SteelMint: Indian HRC export index drops by $23/t w-o-w on limited buying interest

• SteelMint's India HRC export index drops to $700/t FOB
  
  
• Vietnam, UAE buyers move to sidelines; deal to EU buyer heard
  
  
• Vietnam's Formosa cuts HRC prices further by $35-40/t for Aug, early-Sep sales
  
  

Indian HRC export index fell by $23/t in the overseas trade platform this week. Limited buying interest in Vietnam and the UAE weighed on the offers from Indian steel mills. It should be kept in mind that Indian mills are offering boron-added HRCs for exports, as it does not fall under the purview of the export duty.

SteelMint's India HRC export index was recorded at $700/t FOB east coast, contrasted against $723/t FOB assessed a week ago, a fall of $23/t w-o-w.

Rationale: Sixteen indicative prices were considered as T2 inputs, while there was no export deal reported to Vietnam or the UAE to be considered as T1. The final price was an average of T1 and T2 inputs which stood at $700/t FOB. The CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.

Market-wise highlights

1. Limited buying interest in UAE weighs on offers: Offers from Indian mills dropped to $760-770/t CFR in the market as against last week's $790-800/t CFR UAE. "I haven't seen any interest. A few buyers who seemed keen last week have also decided to wait after yesterday's price slide in China," informed a reliable UAE-based source.

Meanwhile, another source informed, "Everyone is carrying stocks from earlier bookings, hence there is limited buying interest in the market."

2. Vietnam's Formosa cuts HRC prices further by $30/t for Aug, early-Sep sales: The Vietnamese integrated steel major, Formosa Ha Tinh, announced further reduction of $35-40/t in prices for August and early September sales today. This is the second price revision this month. Subsequent to the announcement, the offers for HRCs (SAE1006, skin-passed) stand at $720/t CIF Ho Chi Minh City (HCMC).

• Indian mills' HRC (SAE1006) offers are heard at around $710-730/t CFR Vietnam this week contrast against $740-750/t CFR a week back.
  
  
• Chinese HRCs (SAE 1006) from mills like Benxi were heard being offered at $700-710/t CFR Vietnam, as against $750/t last week.
  
  
• Russian mills' offers were heard steeply low at $680/t CFR compared with those from the Indian and Chinese counterparts.
  
  

There is limited buying interest in the market at present amidst the continual drop in global HRC prices. Liquidity concerns are also heard to be emerging in the market, keeping buying interest at bay.

Inclusion of Vietnamese-origin hot-dipped galvanised products (HDG) in the country-specific quotas by European Union has also put a brake on demand.

3. Export deal concluded to EU last week at reduced price levels: A private Indian steel major booked 30,000 t of HRCs (boron-added) for exports to the EU last week. The deal was concluded at Euro 745/t (translating to $786/t) CFR for July shipment. However, it could not be confirmed till the time of publishing this report.

This price is down steeply from the levels of $1,000/t CFR as assessed just before the levy of the export duty by the Indian government.

Outlook
Current market sentiments indicate that HRC offers may remain under pressure on the global trade platform in the near term. The Chinese HRC (SS400) offers witnessed a steep decline of $65/t this week to $695/t FOB against last week's $760/t FOB. Buyers- both domestic and overseas, went back to the sidelines expecting further decline in prices and increase in inventories.