Indian HRC could hit EU import prices in medium term

India's removal of its export tax on finished steel could be bearish for the European hot-rolled coil (HRC) import market in the medium term, potentially increasing volumes from a large bulk exporter.

Last year, India accounted for almost 15pc of HRC imports into the EU27, shipping 1.37mn t out of a 9.2mn t total. Its share was up from about 11pc over the previous three years.

Last year, Indian prices were some of the most competitive in the import market, to the extent that there was talk of the country being a potential target for anti-dumping duties in the EU. At this time it was widely viewed as the benchmark for European import buyers.

In the year to September, India has been less than 10pc of the EU HRC import market. In fact it is the only key supplier not to have increased its share since March, driven by the imposition of its export duties in May: Indian finished steel exports fell about 55pc year on year in April-October, according to the country's Joint Plant Committee.

Shipments from the country fluctuate in line with the EU's safeguard quota. Volumes are typically higher at the start of a quarter, when duty-free quota volumes reset. In April, they were 14.5pc of the EU HRC import market, then 18.5pc in July.

But the removal of the duty is unlikely to have any major impact in the near term, given weak demand, strong service centre destocking and competitive local prices. One Italian producer is selling broadly in line with sub €600/t cfr import offers to maintain market share, and even below in some cases.

Buyers have had a smorgasbord of competitive import options, primarily from Japan — an atypical seller of HRC into the EU — as well as some other Asian producers.

But longer lead times coupled with uncertainty over price direction have tapered appetite somewhat from those that do not have to purchase overseas tonnages. Instead, they have been using third-country offers as leverage with domestic suppliers.

By Colin Richardson

EU HRC imports