Indian steel mills hold back on export offers as China brings down steel prices further in global markets

As China drops price of the most traded steel offerings (the benchmarked hot rolled coils) by at least $19 per tonne to just $537 per tonne for export markets, down 3 -5 per cent month-on-month, the Indian exporters have either stalled offers or continue to hold back trade with Middle East, South East Asian nations and also Europe. 

Indian offers are at least at or above $580 per tonne, nearly 8-10  per cent higher than Chinese prices.

It has been nearly one month since Indian mills have slowed down or stopped export offers because of uncompetitive pricing by Chinese mills. Last export orders we’re reportedly concluded at $580 per tonne, trade sources said. 

Export offers dip

According to a report by consultancy SteelMint, steel prices continued to show a declining trend globally in October.

Trade sources in India say, Chinese offers or prices are so low that “they are uncompetitive” for mills here.

China’s domestic demand recovery remained slower than expected because of which the export offers remained low.

In order to complete globally,  offers from Japan remained stable (mostly flat at m-o-m levels ). 

Vietnamese steel major Formosa Ha Tinh reduced its HRC prices by $15/t m-o-m for late-November and early-December 2023 shipments. This was a red flag to Chinese mills to lower their offers to Vietnam, SteelMint said in a report. 

Domestic market outlook

Indian mills continued their focus on domestic demand, which grew at 15 per cent-odd for April-September of this fiscal.

According to Jayant Acharya, Joint MD & CEO, JSW Steel - among the largest steel makers in the country - the current “geo-political situation is a matter of concern”.  While, Asian markets “apart from China” are doing well, and USA remains resilient, the EU is slowing down. 

“India remains a bright spot,” he said during the post earnings analyst call, while pointing out that in April - Sept, steel imports or shipments coming into India went up by 23 per cent y-o-y and it “remains an area which needs to be watched out”. Exports on the other hand moderated, dropping by 11 per cent y-o-y.

Acharya explained that “at an international level” steel prices in India could at the most see a 5 per cent premium, keeping in mind the current trend in raw material prices and not factoring in the lower priced offerings that are coming in at uncompetitive rates.

“The difference between import price - where deals were recently concluded at around $580-590 per tonne - and domestic price of steel (in Indian market) looks high primarily because there is some country which has excesses capacities and is using the demand visibility in India to offload those excess stocks at uncompetitive prices. This mostly happens at a trade level and generally not in the mill level. They (the importer/) may not be selling at the same lower price in their respective country. So this is something that we are keeping a watch on,” he said. 

“Steel prices globally have bottomed out and are expected to improve in the coming quarters. Improvement in realisations would help partially mitigate the increase in coal prices,” Acharya added. 

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