Indian mills have hiked their hot rolled coil
export offers on the back of strong sentiment in the European market and price
hike expectations from Chinese mills.
The increase is backed by decent demand in the
Indian domestic market and restocking being done by traders ahead of the Indian
budget announcement, with expectations of prices surging further in February.
Most Indian mills prefer to sell HRC into Europe
for March shipment and book good revenue for this fiscal year, ending 31 March
2023 (FY23), as Europe is currently the highest-paying customer. However, some
sources feel prices will stabilise in the near future as this surge is
"sentiment-oriented, not demand-oriented", they tell Kallanish.
Last week, a tier-1 Indian mill through a trader
sold 10,000 tonnes and 3,000t of structural grade HRC to northern Europe and
southern Europe, respectively, each at $780/tonne cfr. Another buyer also
informs of receiving quotes at $785/t cfr Spain for the same grade, netting
back to $720-725/t fob India.
"European euphoria is expected to last only
for 7-10 more days, considering the buyers’ resistance to the price hike and
China’s [post-holiday] resumption," says a source. "This will also
control the price hike spree by India, which might result in two things … Either
India will reduce their quotes, which is unlikely to happen considering the
strong domestic market, or else they will quit exports and focus on the
domestic market through [the end of] FY23."
Indian steelmakers have raised their re-rollable
grade HRC offers to $745-750/t cfr Gulf Cooperation Council (see separate
story). Two sources confirm hearing this offer in the United Arab Emirates
market; however, a deal had not been concluded by deadline on Tuesday.
Last week, Indian mills raised their domestic HRC
offers by INR 750/t ($9.17) to INR 57,750/t ex-Mumbai for E-250 grade HRC.
Quotes for E350 HRC, cold rolled coil and galvanized coil have meanwhile been
received at INR 60,750/t ex-Mumbai, INR 64,500/t ex-Mumbai and INR 67,500/t
ex-Mumbai, respectively.
Market participants feel prices will surge by a
further INR 2,000-2,500/t in the domestic market. This hike will also take
export prices to $750-755/t fob India, translating to $800-810/t cfr Europe,
from $780-785/t cfr Europe now.
Many
Indian mills are bullish on the upcoming budget, and if the government
increases the import duty on flat steel, this will further encourage mills to
raise their offers, without hesitation. Buyers are monitoring Chinese offers,
as they are hopeful that China might reverse the prevailing sentiment if Covid
infections linger on for longer than expected. This would result in oversupply
of HRC in the global market, bringing prices down.