Posted on 05 May 2021
Indian billet export prices hit an all-time high in a recent deal
Indian billet export prices surged in a recent deal to hit a record high since data is maintained with SteelMint from Nov’12. The prices surged by $15-20/t, against our last bi-weekly India billet export assessment- $610-615/t FoB, published on 30 Apr ’21. According to SteelMint sources, an Indian mill recently sold 30,000 t billets at around $630/t, FoB India, for June ’21 shipments.
Reasons for price surge- SteelMint’s view
- China’s slashing of import tariffs on semi-finished steel to boost exports from India: China’s Ministry of Finance announced last week that it will slash the import duty on pig iron, crude steel and ferrous scrap- to zero from May ’21. The government is looking to rein in the burgeoning steel production by removing export incentives and facilitating imports of semi-finished steel. With non-ASEAN billets also having 0% import duty, there could be a greater competitive market seen along with those of ASEAN origin billets, as it will reduce the price spread by around $15. China’s semi-finished steel imports rose significantly to ~17 mn t in CY ’20 compared with ~3 mn t in CY ’19.
- Adjusted export tariffs: China has finally annulled the 13% value-added tax (VAT) rebate on exports of 146 steel products from 1 May ’21, including rebar and wire rod. It is likely to increase steel consumption in China and may result in a fall in exports considering higher domestic realizations. Hence going forward, we may see limited export offerings of long product from China, which is likely to result in spike in the global long product prices. However, the impact of production cuts remains uncertain.
- SHFE rebar futures surge: The rising Chinese rebar futures are consequently pulling the Chinese buying indications resulting in higher deal values. In the past two weeks, the futures witnessed a rise of around RMB 250/t ($39/t). Last week, it settled at RMB 5391/t ($833/t). Moreover, the removal of import duty on billets has provided a further boost.
- Turkey imported scrap prices climb to over one month high: Imported scrap prices in Turkey have moved North throughout the last week. Buyers are expecting that offers may go up further before the Eid holidays. Meanwhile, increasing demand for billet and rebar is likely to keep the market active in the coming days. Price indications for US-origin HMS 1&2 (80:20) stood at $445-450/t CFR Turkey towards the closing of last week, up around $20/t w-o-w. Prices have hit over a one-month high level as similar levels were last seen towards end- Mar’21
Outlook: Market participants expect bids from Chinese mills for imported billets to rise after they return from Labour-day holidays in the middle of this week.
Source:SteelMint
