SteelMint: Limited overseas trade pulls down Indian HRC export index by $8/t

• HRC export index drops to $575/t FOB
  
  
• Low buying interest, bid-offer disparity prevail in Vietnam
  
  
• Mills seem reluctant to reduce offers
  
  
• Energy price surge issue in Europe, Turkey may lend support
  
  

SteelMint's India HRC (SAE1006, boron-added) export index dropped by $8/tonne (t) this week to $575/t FOB east coast. A point to note is that the index had remained unchanged for four consecutive weeks till the previous assessment on 30 August 2022.

Also, some Indian mills are showing low interest in export trade as they see domestic market realisations are better compared to overseas ones at present. SteelMint's benchmark assessment for HRC (IS2062, 2.5-8mm) was assessed at around INR 55,500-56,500/t ($695-708/t) exy-Mumbai as on 1 September 2022. The prices mentioned are exclusive of GST @ 18%.

Rationale: Fifteen indicative prices were considered as T2 inputs. An export deal to UAE involving 4,000t of HRCs was heard concluded 2-3 days back. However, the quantity is low and thus not considered as T1 under the rationale. The final price was an average of T1 and T2 inputs which stood at $575/t FOB. The CFR prices were converted to FOB equivalent by deducting freight costs from the buyer/seller.

Market-wise highlights

1. Increased competition, bid offer disparity in Vientam: Indian steel majors have struggled to book exports to Vietnam since the beginning of CY2022. In addition boron-added HRCs being offered after the export duty announcement on 22 May 2022 dampened the buying interest further.

Apart from the above, competitive prices from domestic producers and exporting countries such as China and Taiwan have posed challenges for Indian steel majors.

However, some Indian mills were heard to have withdrawn offers for the Vietnam market a week back. This week, the indications were heard at around $610/t CFR.

Chinese HRC (SAE1006) was heard at $610/t CFR, unchanged over the week.

2. Small deal reported in UAE: A private Indian mill was heard to have booked 4,000t of HRCs for export at $620/t CFR UAE. The deal was sealed 2-3 days back and is scheduled for early-October delivery. Indicative offers from India still hover around the previous levels of $630-640/t CFR despite limited buying interest from the market. On the other hand, offers from Chinese mills have dropped to $620-630/t CFR compared with the previous week's $650-660/t CFR.

3. Energy prices surge in Europe, Turkey may lend support: HRC indications for the European markets are still being heard at $690-700/t CFR Antwerp in the absence of counter bids. In August, the market had remained inactive amid planned annual holidays. Now more and more participants are returning to the market and thus activities might pick up in the upcoming days, infromed reliable sources.

ArcelorMittal has announced the closure of a factory in Europe as a result of rising gas and energy costs. Also, Turkish authorities raised electricity and natural gas prices for households by around 20% and by around 50% for industry last week. Hence, imported HRC inquiries are likely to firm up from these markets. A few market indications were also heard for Indian HRCs at around $630/t, CFR Turkey.

4. Holiday mood keeps Nepal market inactive: Most of the Nepal participants had started zooming out of the market a week back amid festivities. The market remains inactive during the Dussehra and Diwali festivals. This year, these are falling in September and October, informed Nepal-based participants. Indications from Indian mills are heard around INR 52,500/t ($657/t) CFR Raxaul border, unchanged from the previous week. However, these may vary dollar terms owing to the fluctuation in currency conversions.

Near-term outlook
Indian HRC export offers might see some uptick in the upcoming week because of the changes on the global trade platform. Energy crisis in Turkey and European Union, and the recent impact of typhoon Hinnamnore in South Korea might open more avenues for exports for Indian steel majors.