Although ex-India hot rolled coil (HRC) prices are mainly stable as compared to offers reported at the end of last week, prices have shown some negative bias against offers at the beginning of last week mainly due to lower offers in Europe. However, large Indian mills remain out of the export markets and are not submitting bids in the current volatile global conditions and prefer to push volumes locally.
Sources said that, even as ex-India HRC prices have been maintained at $560-585/mt FOB, versus $560-600/mt FOB at the beginning of last week and at the same level as compared to the end of last week, at the same time stray bids from the main trade destinations, including the Middle East, were heard at low as at $520-530/mt FOB, but have been rejected by Indian mills which claimed that even discounted local sales ensure a better margin compared to sales overseas.
“Globally, there are too many volumes amid weak demand. Demand in China is very sluggish, and Chinese mills are therefore pushing higher volumes overseas and buyers have multiple cheaper sourcing options. It is not fiscally prudent for Indian mills to get into a pricing war to export,” a source at Tata Steel Limited said.
“For most mills, the only margin available from exports is the benefit from local currency depreciation. Based on invoice prices in dollar terms, margins are negative and hence there is no incentive to export. Even discounted sales domestically offer better returns,” another source told SteelOrbis.