Indian HRC plunges amid high competition, limited enquiries

Indian hot rolled coil offers have plunged remarkably, in response to high competition from Japan and China, coupled with continuously low bids from overseas buyers and falling domestic market sentiment, sources inform Kallanish.

Japan recently dropped its non-alloy grade HRC offers to ASEAN to around $650/tonne fob, which has adversely impacted the scope for Indian alloy-added HRC. Moreover, owing to plunging enquiries from Europe, Turkey and other regions, mills are facing a hard time finding buyers for HRC.

Indian alloy-added SAE 1006 2mm+ HRC offers to Vietnam have plummeted $40-50/t on-week to $670-680/t cfr Ho Chi Minh City (HCMC), equating to $640-645/t fob India. One major Indian steelmaker has reportedly sold 60,000 tonnes of alloy-added HRC to Vietnam at $675-680/t cfr HCMC this week.

“Japan and China are threatening Indian mills by continuously dropping their offers,” opines a senior trader. “India has limited scope … Europe is not bidding, demand in the GCC is down and now this competition in Vietnam. Everything is pointing to either a sharp downfall shortly or Indian mills will plan shutdowns.”

Indian structural grade HRC offers to Europe are at $750-760/t cfr Italy; however, no deals have been reported.

“Buying interest from Europe is plunging majorly because of rising inflation and falling domestic offers in Europe,” says a trading source. “Domestic mills in Europe are hungry and are offering their HRC at a competitive price to imports. Customers are seen taking offers from Indian mills once or twice in a week and show no interest after that.”

“Moreover, a majority of [European] buyers will go on holiday, which is why no one wants to fill their inventories and the market is quite there,” he adds.

Quotes for 2mm+ re-rollable grade HRC to the Gulf Cooperation Council and neighbouring region plunged to $715-720/t cfr Jebel Ali this week. A deal for 25,000-30,000t was heard concluding late last week and earlier this week at $715-770/t cfr Jebel Ali for multiple grades, including special structural HRC.

Meanwhile, HRC offers in the domestic market are heard at INR 60,000/t ($760/t) ex-Mumbai this week.

The Indian rupee has recently depreciated to 78.95/USD, helping mills to gain INR realisations despite dropping their export offers. Moreover, they will receive cheaper Russian coking coal cargoes in July, which will ease their cost of production.

But the main question remains over to what extent mills will agree to drop offers. It is also unclear whether they will advance stoppages from the typical August schedule to balance supply with demand, or whether they will continue to ride out the plunging market.