SteelMint: Indian HRC export index falls $10/t w-o-w in recent deals

• SteelMint's India HRC export index at $535/t FOB, down $10/t w-o-w
  
  
• Deals reported for Middle East
  
  
• Low buying preference persists in Vietnam, EU
  
  

The Indian HRC (SAE1006) export index dropped this week by $10/t as indications to the Middle East market dropped in the past few deals that were reported. SteelMint's India HRC export index was assessed at $535/t FoB east coast, which was at $545/t FoB a week ago.

It can be recalled that Indian mills opened up with HRC export indications for the Middle East early last week which gave an upward thrust to the index value. However, later in the week, some indications were floated for Vietnam and then withdrawn by mills a few days back, informed sources.

Rationale: Eleven indicative prices were considered as T2 inputs. A deal to the UAE for 15,000t HRC (SAE1006) at $600/t CFR was considered as T1. The final price was an average of T1 and T2 inputs which stood at $535/t FOB. CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.

Market highlights

1. Vietnamese market turns to exporting: Indian steel mills indicated offers in the range of $560-570/t CFR Vietnam and then withdrew these later. Since demand in the Vietnamese domestic market has remained lacklustre, mills there have turned to scoring deals via exports.

As reported earlier, sluggish performance of the construction sector and lacklustre trades on the global platform continue to weigh on the demand for imported HRCs in Vietnam. This has also forced Vientamese mills to cut down on output volumes as per local media reports, while seeking export opportunities.

However, offers from China for HRCs (SAE1006) increased to $585-595/t CFR Vietnam from the previous week's $555-565/t CFR. Similarly, offers from Japan were also heard at around $630/t CFR.

2. Buying interest tapers off after few deals in UAE: The buying interest in the UAE market has started tapering off after a couple of deals were concluded in the past 10-15 days. It may be recalled, a deal involving 15,000-20,000 t of HRCs (S235) was booked for export at $615/t CFR and later another deal for 15,000 t of HRCs (SAE1006) was concluded at $600/t CFR for January dispactches.

Current week's indication from Indian mills stand at around $580-590/t CFR this week.

3. European market remains subdued: Buyers in Europe are still slow to come up with firm bids. High power costs and inflationary pressures still have a bearing on buyers' decisions there. Indian mills opened with offers at around $630-635/t CFR this week, after a long gap. "As the steel consuming sectors of construction and automotive in the EU continue to show lack of buying interest, conclusion of deals is subject to buyers' preference," informed sources.

Outlook: Global HRC prices are turning supportive with hike in offers from China post-recovery in steel futures. For instance, Chinese domestic HRC prices have increased by RMB 120/t ($17) w-o-w amidst hike in steel futures. This may give some support to Indian offers as well in the near term.