Posted on 25 Nov 2021
Indian domestic and export offers for hot rolled coil have plunged on lower bids from buyers. Low offers from China have created volatility in India’s target markets and resulted in a state of confusion among end-use buyers, various market sources tell Kallanish.
“Indian mills are not prepared to go below $820-830/tonne fob [India] right now; they will try to manage to export at this level,” says a country head for a renowned global trading firm. “In the domestic market also, they will correct prices a little but not to a great extent.” Correcting beyond a point is counter-productive, he adds.
Indian domestic 2.5mm+ E250 grade HRC offers fell by a further INR 1,500/tonne ($20/t) in the retail segment. Offers in Mumbai clocked INR 69,000/t ex-Mumbai, whereas offers in Delhi are heard at INR 68,000/t ex-Delhi.
“Supply shortages in the domestic market have seen domestic offers surge,” says a senior Mumbai-based trader. “But, owing to a fall in export demand, mills increased HRC supply in the domestic market, resulting in price corrections by almost INR 3,000/t in a month. We anticipate a further fall in the domestic market … offers finally reaching INR 64,000/t in January.”
Indian-origin 2mm+ SAE 1006 grade HRC January-delivery offer indications to Vietnam have further dropped to $850-860/t cfr Ho Chi Minh City (HCMC), which is unworkable against buyers’ bids at as low as $820/t cfr. India is offering at $825-830/t fob east coast and spot market freight is noted at $30-35/t. An Indian mill was heard offering on Tuesday 2.5mm SAE 1006 grade HRC through a trader at $850/t cfr HCMC.
“The market has become very volatile in Vietnam and unlike Indian traders, the Chinese traders hedge deals against Chinese future contracts,” says a senior trader active in the ASEAN region. “As China’s futures have jumped today on the Shanghai Exchange, Chinese traders will look into hedging the deal somewhere. Whereas, Indian traders offer the cargo blindly without any hedging, which increases the risk in longer deliveries in the current market situation. It is like we buy a cargo this month and plan to sell the cargo in January, we cannot take this kind of blind position now … it’s deadly risky.”
“Plus, Chinese traders do both paper and physical trading, whereas we Indians only do the physical trading, which further increases the risk,” the ASEAN region trader concludes.
Offer indications to United Arab Emirates and neighbouring countries decreased further, by $10-20/t on-week to $870-880/t cfr Jebel Ali. A few mills were heard offering at $880-890/t, but no deal is confirmed.
“Market conditions are the same as last week … down,” says a senior Middle East-based trader. “SHFE has recovered today, but still we haven’t seen any immediate impact on buyers’ bids. Owing to the plunging domestic market, Indian mills are looking to lower their export offers to take a position in concluding a deal.”
Port congestion in Europe coupled with an exhausted quota has kept European buyers away from Indian sellers. Mills are offering mainly to Turkey, where quotes for 2mm+ SAE 1006 grade HRC are noted at $890-900/t cfr Turkey. “Practically, Indian mills are not offering anything on paper for any region because of volatility. They are just indicating offers verbally to traders; they [mills] want to play safe and fetch the deals with better realisations,” says an Indian trader handling the European region.
Source:Kallanish
