1. India: Monsoon Season Dampens Construction Demand, Sharp Price Divergence Between Long & Flat Products
1.1 Core Causes of the Traditional Off-Season (July–September Monsoon Period)
July to September marks India’s lengthy national monsoon season. Heavy rainfall halts most infrastructure and real estate construction sites nationwide, directly slashing demand for long steel products such as rebar and wire rod by half. Manufacturing sectors including automotive and home appliances remain largely unaffected by rain, keeping demand for hot rolled coil (HRC) relatively resilient. This creates a clear market split: weak long products, steady flat products.
- Long products: Mumbai rebar EXW prices fell to USD 512/ton, down 9% month-on-month. Steel mills have accumulated 10–15 days of on-site inventory. Small and medium induction furnace mills cut prices drastically to clear stock, while traders only place minimal orders for immediate consumption with no advance restocking intentions. Billet spot prices in Raipur stand at merely USD 396/ton, with nearly zero inquiry activity.
- Flat products: Mumbai HRC EXW prices held firm at USD 602/ton, slipping only USD 3 week-on-week. India has imposed import safeguard tariffs on steel, creating high entry barriers for low-cost overseas flat steel. Coupled with steady order intake from the automotive sector, prices of HRC are well-supported at the bottom.
1.2 Impact of Diverted Russian Steel & Raw Materials on India’s Market
- Competition from diverted steel billets and semi-finished goods
Black Sea Russian billet FOB prices range from USD 462–466/ton, USD 15–25 cheaper per ton CFR India than billets from China, Japan and South Korea. Traders purchase large volumes of Russian billets to supply independent small rolling mills, crowding out sales of domestically produced sponge iron and indigenous billets and forcing local semi-finished steel prices down continuously.
- Long-term substitution of coking coal raw materials
India plans to drastically expand imports of Russian coking coal, which currently accounts for 18–22% of India’s coal imports, with a target to multiply this share 2–3 times in the future. Low-cost Russian coal cuts steelmaking expenses for Indian mills, which are then forced to slash finished steel prices to retain market share and intensify domestic market competition.
- Restructured trade flows
Large volumes of Russian steel cargo originally bound for Europe and Turkey have shifted to India due to the EU’s new steel import quota restrictions. Sea freight volumes from Russia to India jumped 27% month-on-month in July, and the influx of low-cost supplies keeps a lid on domestic price hikes.
2. Overall Slump Across Southeast Asia: Construction & Manufacturing Off-Season Brings Muted Transactions
Southeast Asia simultaneously enters its rainy construction off-season, with construction site operating rates falling by 30%–50% in Vietnam, Indonesia, Malaysia and Singapore. Export orders for home appliances and furniture have also entered their traditional slow season, weakening downstream purchasing appetite for flat steel and resulting in a broad supply surplus across the region.
2.1 Breakdown of Market Conditions by Country
- Vietnam (Benchmark for the whole region)
Vietnam’s two leading steel manufacturers, Formosa Ha Tinh Steel and Hoa Phat, have lowered HRC factory prices for two consecutive months, with a cumulative cut of USD 40/ton in a single month. July–August shipment HRC CIF prices stand at only USD 538–548/ton. Domestic finished steel prices undercut import alternatives, so buyers prioritize local output. Transactions for imported HRC from China and India have ground to a near halt, forcing import quotations to follow suit with USD 10–25/ton reductions.
- Indonesia
The previous tight billet supply driven by Iran’s billet export ban has fully reversed. Mass volumes of low-cost Russian billets arrive at Indonesian ports, slashing raw material costs for local rolling mills and keeping HRC quotations on a downtrend. Infrastructure projects suspend operations amid the rainy season, rebar inventories keep piling up, and traders adopt a wait-and-see stance with no restocking activity.
- Singapore & Malaysia
Singapore rebar CFR prices tumbled to USD 515/ton, down USD 5 week-on-week. Imports are dominated by Chinese rebar, yet terminal construction demand remains slack; bulk full-vessel orders are rare, with only small batch bulk cargo changing hands. Local Malaysian steel mills have rolled out matching price cuts, sharply narrowing cross-country price gaps and eliminating arbitrage opportunities across the region.
- Laos & Central Asia
Laos’ steel prices remain depressed due to low-cost Chinese exports flowing through border channels in Yunnan. Meanwhile, reduced Russian steel shipments to Central Asia as supplies divert to Southeast Asia have pushed up local spot prices, yet terminal demand stays sluggish, resulting in a market with nominal prices but virtually no real transactions.
2.2 How Diverted Russian Steel Reshapes Competitive Dynamics in Southeast Asia
(1) Restructured Supply Landscape: Three Core Supply Sources (Chinese Steel, Local Mill Output, Russian Steel)
In past years, Southeast Asia’s steel imports relied primarily on flat products from China, Japan and South Korea. Following the EU’s tightened steel import quotas in 2026, massive volumes of Russian billets, HRC and rebar originally destined for Europe have rerouted to Southeast Asian shipping lanes. Supported by low Black Sea FOB prices and discounted ocean freight, Russian steel holds a clear price advantage:
Russian billet CFR Vietnam prices fall as low as USD 470–480/ton, USD 15–20 cheaper than Chinese billets; Russian HRC CFR Indonesia prices of USD 525–535/ton directly undercut Chinese export HRC pricing. Domestic Chinese mills are forced to slash export quotations to compete for orders, steadily narrowing price gaps between domestic and overseas steel.
(2) Compressed Profit Margins for Regional Local Steel Mills
Vietnamese and Indonesian domestic rolling mills once maintained stable profit margins amid previous billet shortages. Today, the continuous inflow of low-cost Russian billets forces finished steel prices down, drastically squeezing processing profits. Some small and medium rolling mills have cut operating rates amid losses. While regional steel supply has slightly contracted, demand has fallen even more sharply, failing to lift market prices.
(3) Transformed Regional Price Arbitrage Logic
Historically, consistent arbitrage price gaps existed across Southeast Asian nations (e.g. higher HRC prices in Vietnam than Indonesia, higher rebar prices in Singapore than Malaysia). The uniform influx of low-cost Russian steel to ports across all Southeast Asian countries has sharply compressed inter-country steel price differentials, erasing nearly all cross-border arbitrage opportunities for traders and further cooling overall market trading activity.
3. General Regional Impacts Brought by Diverted Russian Steel Supplies
- Restructured Price Tiers
A three-tier pricing system has taken shape across Asia: low-cost Russian steel forms the price floor, Chinese export steel sits in the mid-price bracket, and high-end flat products from Japan & South Korea occupy the premium price segment, pulling down the overall regional steel price benchmark.
- Fiercer Export Competition
Chinese steel exports face dual pressure: price competition from discounted local Southeast Asian mill output and diverting low-cost Russian steel supplies. Both overseas inquiries and firm export orders from China softened notably in July.
- Widening Regional Market Divergence
- India: Long products bear the brunt of price pressure, while flat steel holds up better behind import tariff protection.
- Southeast Asia: Lacking import tariff barriers, all steel grades trend broadly weaker.
- Central Asia: Reduced Russian steel arrivals lift local prices slightly, yet trading activity remains negligible amid poor demand.
- Downward Pressure Passed Along the Raw Material Chain
Low-cost Russian coking coal and scrap steel are simultaneously imported across Asia, suppressing raw material procurement costs for regional steel mills and capping any upward room for finished steel prices from the upstream supply chain.
4. Short-term Market Outlook (Late July – Early August)
- India: The monsoon season will persist until late August at minimum, keeping long steel prices range-bound and weak. Imported Russian coal and billet volumes will keep rising, leaving limited room for price rebounds.
- Southeast Asia: The off-season downturn will continue. More Russian steel cargoes will arrive at regional ports, coupled with price-cut competition from Chinese export steel, leaving HRC and rebar prices vulnerable to further falls. Price recovery will only become feasible once the rainy season ends in September and construction demand picks up.
- Trade Trends: The shift of Black Sea Russian steel exports to Asia has become a long-term structural trend. Southeast Asia and India will remain direct price competitors for Chinese steel exports going forward.
