Indian mills have hiked their hot rolled coil export offers on the back of strong sentiment in the European market and price hike expectations from Chinese mills.

The increase is backed by decent demand in the Indian domestic market and restocking being done by traders ahead of the Indian budget announcement, with expectations of prices surging further in February.

Most Indian mills prefer to sell HRC into Europe for March shipment and book good revenue for this fiscal year, ending 31 March 2023 (FY23), as Europe is currently the highest-paying customer. However, some sources feel prices will stabilise in the near future as this surge is "sentiment-oriented, not demand-oriented", they tell Kallanish.

Last week, a tier-1 Indian mill through a trader sold 10,000 tonnes and 3,000t of structural grade HRC to northern Europe and southern Europe, respectively, each at $780/tonne cfr. Another buyer also informs of receiving quotes at $785/t cfr Spain for the same grade, netting back to $720-725/t fob India.

"European euphoria is expected to last only for 7-10 more days, considering the buyers’ resistance to the price hike and China’s [post-holiday] resumption," says a source. "This will also control the price hike spree by India, which might result in two things … Either India will reduce their quotes, which is unlikely to happen considering the strong domestic market, or else they will quit exports and focus on the domestic market through [the end of] FY23."

Indian steelmakers have raised their re-rollable grade HRC offers to $745-750/t cfr Gulf Cooperation Council (see separate story). Two sources confirm hearing this offer in the United Arab Emirates market; however, a deal had not been concluded by deadline on Tuesday.

Last week, Indian mills raised their domestic HRC offers by INR 750/t ($9.17) to INR 57,750/t ex-Mumbai for E-250 grade HRC. Quotes for E350 HRC, cold rolled coil and galvanized coil have meanwhile been received at INR 60,750/t ex-Mumbai, INR 64,500/t ex-Mumbai and INR 67,500/t ex-Mumbai, respectively.

Market participants feel prices will surge by a further INR 2,000-2,500/t in the domestic market. This hike will also take export prices to $750-755/t fob India, translating to $800-810/t cfr Europe, from $780-785/t cfr Europe now.

Many Indian mills are bullish on the upcoming budget, and if the government increases the import duty on flat steel, this will further encourage mills to raise their offers, without hesitation. Buyers are monitoring Chinese offers, as they are hopeful that China might reverse the prevailing sentiment if Covid infections linger on for longer than expected. This would result in oversupply of HRC in the global market, bringing prices down.