Posted on 29 Dec 2020
In what was turning out to be a dull export scenario in November, a new spark of excitement has been lit. In an interesting development since the end of last month (November), mills have been busy supplying flats, especially plates and hot-rolled coils (HRCs), to European buyers in particular.
As per SteelMint’s provisional data, total November exports were at 0.92 million tonnes (mn t), which is an almost 10% drop m-o-m in absolute terms against October’s provisional 1.02 MnT. However, finished flats exports were up 15% m-o-m, whereas finished longs and semis dropped by almost 14% and 33% respectively m-o-m.
Exports more lucrative-
European buyers began entering the market with supply needs in the last 25-odd days and it seems all the bookings have been concluded since then. Mills started booking at USD 650/tonne CFR end-November in what was regarded as the first export deal for Europe after July-August. “The mills kept booking in varying lots, and almost each time at increased prices, to finally reach a level of up to USD 770-775/tonne CFR,” said a trading source.
As per SteelMint data, Indian mills have offered at prices as high as USD 800/tonne CFR to Europe.
Exports are happening for flat products to Europe alone at prices even higher than domestic levels, exclaimed a trader, adding that, in doing so, the market is showing a rather erratic trend. On average, these export deals have been fetching realizations that are higher by INR 2,000-5,000/tonne, compared to domestic sales.
“Prices increased in Europe, and this gave India mills a ground to increase their offers. Being more lucrative, obviously, their interest lay focused on this market,” said another source.
“These deals, which are being struck for around a month, look more attractive than the domestic ones, even though prices have been increased multiple times for the home market. If domestic price realisations in the domestic market were say ‘x’, mills have been realising 5x, 10x and 15x in the overseas market,” said another source.
Domestic ex-mills HRC prices are hovering around INR 53,000/tonne, as per a source, a rise from around INR 48,000-49,000/tonne a month ago. In fact, there have been four price hikes in the domestic market in December alone and SAIL’s HRC offers are hovering around INR 51,500-INR 52,000/tonne, AM/NS India’s are at INR 51,600-51,700/tonne and JSW Steel’s at INR 51,000-INR 52,000/tonne at present.
Why is demand rising in Europe?
So, is demand increasing in Europe, Covid not-withstanding? A trader said that Europe is habitually a market where demand overshoots supply. And, since this geography had been under lockdown constraints for a longer period than South East Asia, once it reopened a pent-up demand spilled over.
“Immediately, there was a flow of enquiries. Europe started importing from all over the world and India is also seizing this opportunity,” said the trader.
A source informed that the total volume of plates and HRC exports on spot basis have touched 2,50,000 tonnes in which Europe consignments have been pegged at a lion’s share of easily more than 1,50,000 tonnes.
Explaining the sudden export surge to Europe, another source reasoned that mills had not sold many consignments to this geography since July-August. “A long gap can result in the market slipping out of the hands of the sellers. The mills wanted to maintain sales continuity in this market. Hence, the sudden surge.”
It may be mentioned that since May this calendar, exports were happening but mainly to China and Vietnam.
So, will this trend continue?
“We are almost into the new year now. Europe is on holiday. If European demand stays stronger than supplies, this trend will continue,” observed a source.
Source:SteelMint
