Poor global steel demand fuels HRC offers to India

India has emerged as a small-scale clearing market for steel in recent months because prices and demand have not been eroded to the same extent as in other major producing and consuming countries.

Indian hot-rolled coil (HRC) prices fell by 27pc between April and October, while European prices were down by 52pc and cfr Vietnam prices were down by 41pc.

According to market sources, India has booked at least 120,000t of Russian HRC since July, around 150,000t from Japan, some of which was booked by a domestic mill, and around 25,000t from South Korea for arrival in December.

Offers for Chinese material have also been floating in recent weeks, while imports from Vietnam — India's biggest export destination in the 2021-22 fiscal year — have been heard.

Russian offers have faded because of increased requirements at home and low vessel availability.

India did not import any HRC from Russia in the 2021-22 fiscal year, while imports from other regions were mainly for the automobile sector and for other finished goods destined for export.

India turned into a net importer of steel for the second time in four months in October, when imports jumped by 57pc on the year to 593,000t. April-October imports rose by 15pc on the year to 3.15mn t.

Vietnam is Asia's largest HRC importer, but poor macroeconomic conditions, including a property sector struggling with tight credit, overcapacity in southeast Asia, and weak appetite from China have weighed on cfr Vietnam HRC values. A drop in offer prices to Vietnam from sellers in China has also failed to spur demand, with buyers sitting on adequate inventories and no sign of a demand recovery. Announcements of output cuts by domestic mills further underscore the challenges faced by the sector.

Indian mills have downplayed the threat from imports, saying currency fluctuations and longer lead times will keep a cap on import volumes.

Imports could continue, however, if domestic mills' prices stay at their current levels, other participants said. Indian mills' export offers in recent months have been at least $100/t lower than domestic prices, and mills' reluctance to reduce domestic prices has prompted buyers to turn to imports.

The domestic market is still waiting for signs of a seasonal upswing in demand after last month's holidays. Indian HRC prices have been steady at 56,250 rupees/t ($689/t) this month as buyers expect a price correction triggered by lower international values and coking coal costs. The Argus premium hard low-volatile coking coal index cfr east coast India stood at $279/t on 18 November, down by over 60pc from a record $698/t earlier this year.

Demand in south Asian markets is expected to gradually recover, with China loosening its Covid controls and announcing measures to support the real estate sector. But until then, imports in India are likely to continue.

By Deepali Sharma and Sumita Layek