The recent volatility of the dollar versus the euro helped Indian hot rolled coil exporters conclude deals in Europe last week at fairly high prices. Indian mills now aim to further hike HRC prices to Europe, contrary to the sluggish market sentiment prevailing in the eastern hemisphere, sources tell Kallanish.
Last week, a tier-1 Indian mill sold 10,000 tonnes of structural grade HRC to Italy and Antwerp at $800-805/tonne cfr, netting back to $750-760/t fob India for end-March/April shipment. "This deal was done last week when USD depreciated to around 1.10/EUR and European buyers accepted this offer, with India considering no marginal loss in EUR realisations," informs a source. "However, since this deal, Indian sellers are mulling a further hike, but this is tricky as the majority of European buyers have done their restocking."
This week, Indian HRC offers have surged to $810-815/t cfr Europe; however, no new deals have been confirmed.
Offers to the Gulf Cooperation Council are meanwhile being heard at $740/t cfr GCC. However, the sluggish sentiment developing in China has made buyers cautious, and they are now preferring to wait and watch the market. Last week, a deal for 20,000-25,000 tonnes of re-rollable grade HRC was concluded by an Indian major at $745-750/t cfr Abu Dhabi for March shipment.
"Falling Chinese futures have confused buyers in the GCC as they were expecting a price hike by China after the New Year holidays but, conversely, the opposite happened in the market," opines a mill source. "We were expecting a lot of buying activity to happen in the GCC market, but now a majority of buyers have postponed their purchases and are observing the market trend."
Last week, Indian mills raised their domestic HRC offers to INR 59,500-60,000/t ($720) ex-Mumbai for E-250 grade HRC and INR 62,500-63,000/t ex-Mumbai for E350.
However, market participants are questioning whether the attempted price hike to Europe will be accepted by buyers now amid sluggish sentiment in China and not-so-aggressive demand in Europe following the recent restocking.
The recent hike in coking coal prices to around $350/t fob Australia and strong iron ore sentiment are anticipated to offset the sluggishness in Chinese futures and hence support HRC prices. The majority of participants nevertheless do not feel the market will go up as the Indian price hike is not demand-oriented but sentiment-oriented, which is not expected to sustain for long.
Lastly, the recent hike by mills in India’s domestic market indicates they still have an option to sell HRC in India, if exports do not work out. Moreover, sources also inform that Indian mills do not have much export allocations remaining for this fiscal year ending 31 March 2023, so they will try to sell small quantities at higher prices.
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Very good overview of the weekly steel market.