Posted on 02 Sep 2022
Amid falling Indian finished steel demand, domestic billet offers have plunged remarkably but are still seen as unviable for exports on the back of very low bids and expectations from African buyers.
Sources say domestic billet offers are falling by almost INR 4,000/tonne on-week and expect to see very limited recovery attributed to the upcoming festive season in India, Kallanish notes.
Indian 3SP/4SP re-rollable grade induction furnace billet initial indications plunged by $20-25/tonne on-week to $620-630/t fob western India, equating to $700-710/t cfr Kenya and Tanzania. Meanwhile, bids dropped further to $605-610/t cfr East Africa, following a deal conclusion at $620/t cfr Tanzania by a South African mill.
According to sources, the prevailing chaos following the presidential elections has subdued the market demand for steel in Kenya, owing to which enquiries and bids have plunged remarkably. Moreover, to average out previously booked high-priced billet inventories, buyers are taking bids to extremely low levels.
“The landed price for HMS in India is $480/t and if we add $150/t as the scrap to billet conversion cost, it comes to $620/t and this is what we are offering in the market,” says an Indian mill source. “They [East African buyers] have domestic issues … but it doesn’t mean India is in a position to offer billet at a tremendously low price by making losses.”
East African buyers are heard getting offers from South Africa at $605/t cfr Kenya and Tanzania and, according to one source, a deal is expected to be done at this level by the weekend. An enquiry for 10,000 tonnes of billet was made by an African buyer and bids are heard at a whopping $550/t cfr Kenya on a 100% cash basis. These have not yet translated into a deal.
“Only Indian and Chinese offers are touching the sky at the moment, hence turning into an unviable option for East African buyers,” says a trading source. “We are continuously monitoring other origins as well. Surging energy costs and coking coal prices are seen provoking other origins to consider hiking their offers as well.”
Billet offers in India’s domestic market plunged to $618.81/t ex-Mandi, whereas billet offers in Alang and Ahemdabad are hovering at $621.32/t and $622.58/t, respectively. Ingot – small-sized, semifinished – prices are noted at $619/t ex-Mandi and $615/t ex-Ahmedabad.
Source:Kallanish
