Export prices of Indian hot-dip galvanized coil edged 0.6% higher through October and early November. Healthy booking orders coupled with optimism over positive growth in the US residential construction sector allowed prices to strengthen despite weak steel fundamentals domestically, sources said Friday.
Transaction prices for base-grade 0.3mm thick soft coils with 90 grams/square meter zinc coating were at $835-845/metric ton CFR US last week, including $55-60/mt freight, an increase of 0.6% from levels seen at end-September.
“Prices of HDG exports continue to remain healthy despite poor domestic demand in India,” said a Mumbai-based steel official. He said that industry sources were anticipating the rupee would weaken in the coming weeks, citing poor domestic demand and oversupply in the market. Hence, HDG exports would continue to serve as an attractive alternative to domestic markets. The source also said that there were increased bookings by European buyers in the past week.
Another Mumbai-based steel official shared similar sentiments. He reasoned that residential demand in the US was starting to pick up and, with shorter lead-times from Indian exporters, he had seen more booking orders in the past week.
However, a trader based in Mumbai felt the rally in export demand for Indian HDG would be short-lived, with cheaper Chinese HDG exports seen being offered in the past week. He said there were fewer cargoes for December delivery due to the upcoming festive season in the US but agreed that there would likely be an uptick in demand from next January.
“Most parts of India are in election mood now. As such, many traders would rather remain on the sidelines to seek clearer direction before making any adjustments to HDG prices,” said the trader.
© Steel Business Briefing 2012
