Starting in August, Vietnamese steelmaker Formosa Ha Tinh will restart its steel shipments to India, following the renewal of its import license in May, market sources said. Approximately 60,000-70,000 tons of hot-rolled steel has been booked at a price of USD 590-595 per ton CFR India for delivery in August and among the buyers is a leading Indian pipe manufacturer.
This cheaper steel from Formosa could influence local prices.
Renewal of license for steel shipments to India
In May, the Indian government renewed Formosa’s license for certain rolled steel products. hot-rolled and cold-rolled steel hot-rolled and cold-rolled steel products, facilitating the entry of cheaper steel from the leading Vietnamese producer. The approvals include a hot-rolled steel grade under Indian Standard (IS) 1079, valid until December 4.
This type of steel is mainly used in the manufacture of pipes and tubes and is not commonly used in construction. A number of manufacturers, such as pipe and automotive parts makers, use IS 1079 steel grade and will be able to seamlessly substitute domestic steel for the more affordable Vietnamese material, according to a distributor.
Rising steel prices in India
In April and May, steel prices in India rose due to supply shortages as major steel mills undertook maintenance work. On May 24, Argus’ weekly Indian hot rolled coil (BLC) price for 2.5-4 mm material stood at INR 54,000 per ton (USD 648 per ton) outside Mumbai, excluding GST, up INR 2,000 per ton from the end of March.
Price pressure from imports eased after the expiration of Bureau of Indian Standards (BIS) certificates for many foreign sellers, including Formosa at the end of last year. However, supply is expected to increase in the second half of the year with the availability of more imported material, according to sources.
Between 60,000 and 100,000 tons of material, mainly BLC, have been purchased from Chinese steelmaker Benxi Steel at US$560 per ton CFR India, and are expected to arrive next month. In addition, some market sources mentioned that additional quantities have been purchased from Japan to be shipped in the coming months, although this could not be confirmed.
Increase in BIS certificates
The Indian government may look to issue more BIS certificates this year, as there are currently only a small number of large domestic producers and fair competition needs to be ensured, said a Mumbai-based warehouseman.
The resumption of Vietnamese steel shipments could balance prices in the Indian market, encourage competition and improve the quality of available products. This move could encourage local producers to innovate and optimize their processes to remain competitive with imports.
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Source: argusmedia
Photo: Shutterstock
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