SteelMint: Indian HRC export index drops by $7/t w-o-w on subdued overseas demand

• HRC export index falls to $573/t FOB
  
  
• Demand subdued in Middle East markets
  
  
• Competition on rise in Vietnam market amid lower offers from Japan, China
  
  
• Domestic mills cut HRC prices in Europe
  
  

SteelMint's India HRC (SAE1006, boron-added) export index dropped marginally this week by $7/t to $573/t FOB east coast India. Increased competition in Vietnam, coupled with subdued demand in Middle East markets over inflationary concerns weighed on imported HRC quotes from India. However, mills are mostly focused on the higher realisation being fetched in the domestic market.

Rationale: Ten indicative prices were considered as T2 inputs, while there were no deals to be reported as T1 under the rationale. The final price was an average of T1 and T2 inputs which stood at $573/t FOB. The CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.

Market highlights

1. Imported HRC offers turn competitive against domestic offers: Imported HRC offers to Vietnam dropped below those announced by Formosa Ha Tinh's a week ago. Formosa is offering HRC (SAE1006, skinpassed) at around $593/t CIF HCMC for December and early-January sales. Meanwhile, offers from most of the exporting countries are now in the range of $560-580/t CFR Vietnam levels. For instance, Chinese and Japanese HRCs are being offered at $565-570/t CFR, while Russian offers were heard at $560/t CFR.

Indian mills are still reluctant to book HRCs for exports at lower prices and thus have been focusing on the domestic market which is fetching higher realisations. However, a few quotes were heard at reduced levels of $600-620/t CFR but are not lucrative for the Vietnamese market.

Meanwhile, buying interest was also heard to be subdued in Vietnam. Finished steel sales in Vietnam dropped by about 7.1% m-o-m and 9.9% y-o-y to 1.998 mnt in September 2022, according to recent data released by the Vietnam Steel Association (VSA). Meanwhile, production rose by 23.4% m-o-m and 1.7% y-o-y to 2.466 mnt in September.

2. Subdued demand in UAE: Buying interest in the UAE market continued to stay lacklustre. Indications from Indian mills were heard at around $620-630/t CFR levels against the previous week's $620-640/t CFR. Meanwhile, other countries are offering at lower price levels. Chinese HRCs are being offered at around $610-620/t CFR while those from Japanese mills are at a competitive $600/t CFR. Buying interest in the UAE market stands at around $590-600/t CFR, SteelMint learnt from sources.

3. Indian HRC offers to Europe drop steeply by up to $40/t: HRC export indications for the European market dropped steeply by $30-50/t to around $640/t CFR Antwerp contrasted against $670-690/t CFR a week ago. Buying interest stands low in the European market which has forced local mills to offer discounts to entice buyers. In addition, surging power costs and lower acceptance of boron-added HRCs in the EU continued to pose challenges for Indian mills. On the other hand, the EU domestic HRC prices also saw a decline towards the end of last week amidst higher inventories.

Outlook: It seems Indian HRC export trade activities may remain slow, given the higher domestic realisations and lower offers from other major markets.