Indian steel coil offers have risen to parity with offers in southeast Asia, from discounts of $20-25/t in October, as higher domestic demand squeezes export availability.
Association of Southeast Asian Nations (Asean) country differentials for SAE1006 grade hot-rolled coil (HRC) on a cfr Vietnam basis were at premiums to Indian coil of $20/t for China, $10/t for Japan, $15/t for South Korea and $20/t for Taiwan in October. Premiums for China and Japan, South Korea and Taiwan (JKT) were boosted by heavy discounting by Indian exporters in response to slower domestic demand during the monsoon season.
But Indian offers have risen by $80/t since late October, collapsing premiums for China and JKT coil to below $10/t in early December, under $5/t last week and zero yesterday.
Chinese HRC export prices were the first to bottom out in October, but this failed to push up prices in Vietnam as Indian exporters aggressively discounted compared with other origins. The end of the monsoon season revived domestic demand in India, shifting mills' sales to domestic markets and leaving trading firms without lower-cost export options.
Indian offers for SAE grade coil have risen as high as $500/t cfr Vietnam today from lows of around $420/t cfr Vietnam in mid-October, which was deemed to be the cost level for Indian mills. Steelmakers in Japan, South Korea and Taiwan have raised offers to $500/t cfr Vietnam from $430-435/t cfr Vietnam over the same period in response to the increases from India.
The Argus Asean HRC index has increased to $483/t cfr Vietnam from $412/t on 30 October. The Argus Indian domestic HRC index ended an eight-month slide in November and has increased by 1,500 rupees/t ($21/t) since 1 December to Rs35,000t/t ex-Mumbai.
Domestic restocking in India was driven by anticipated consumer demand, but that demand has been sluggish amid a continuing liquidity crunch. Traders see downside price risks if India's domestic demand does not return soon.
Vietnam's sole coil producer Formosa Ha Tinh Steel has also followed the price trend higher, raising its HRC prices by $15/t for February deliveries on 13 December. The mill has sold out all its domestic allocation for February at around $475-485/t cif Vietnam as its prices are competitive with import offers at $500/t cfr Vietnam for SAE grade coils.
