Posted on 29 Apr 2021
India’s steel exports in financial year 2020-21 (FY21) rose a whopping 61% to 18.92 million tonnes (mn t) against 11.79 mn t in FY20, as per SteelMint data. The spiralling exports in the just-concluded fiscal can be attributed to the Covid-19-induced lockdown for two months last year from March 24 till the beginning of June, when domestic demand went down to nil. The larger steel mills, to keep their blast furnaces running and revenues coming in, had to resort to exports.
The items exported the most last fiscal were finished flats (10.40 mn t), followed by billets (7.25 mn t) with finished longs bringing up the rear at 1.27 mn t.
It was China all the way, whose voracious infrastructure-induced recovery, post-Covid, was fuelling the exports market and Indian mills were happy to oblige. China’s share in Indian mills’ exports last fiscal was a whopping 5.28 mn t, followed by a distant 2.38 mn t to Vietnam and 1.89 mn t to Nepal.
In fact, the data reveals that the growth in exports to China was from a negligibly low base of 0.36 mn t in FY20 to 5.28 mn t in FY21, a dizzying 1,370% increase! The demand for flats was fuelled by a kick-start to China’s automobile sector and billets were fed into its infra projects.
Among the Indian mills, JSW Steel led with 4.94mn t of exports in FY21, followed by the Tata Group with 3.75 mn t and JSPL with 2.11 mn t. SAIL (1.58 mn t), RINL (1.49 mn t), AM/NS India (1.46 mn t) and others followed.
Interestingly, although flats enjoyed the largest share in the exports pie in FY21, billets and rebar exports volumes spurted the most, by 153% and 126% respectively, reinforcing that China’s economic recovery post-Wuhan crisis was led by investments in infra projects.
High Export Prices
However, overall export volumes have remained strong in the past 3-4 months on higher margins, despite strong domestic demand, especially since Europeans were buying at prices that went through the roof.
Mills have continued to raise HRC offers on higher global prices, fetching themselves very lucrative margins. In May-end and June shipments, recent export offers to Vietnam were at $970/tonne (MT) cfr. Offers to the Middle East were even higher at $980-985/tonne cfr while consignments to Europe were booked at an astounding $1,050/tonne cfr (June shipments).
But domestic HRC and CRC prices have also been climbing up to record highs. Benchmark HRCs (2.5-8 mm) have risen from INR 42,000/tonne levels in the first week of October 2020 to more than INR 62,000/tonne in the third week of April, 2021 while 0.9 mm CRCs have shot up from INR 54,000/tonne to INR 78,000/tonne in the same period. However, on a dollar parity basis, exports look even more lucrative at present.
“The only reason for robust exports was pricing in the last 3-4 months. Europeans kept buying at higher prices and this led to further price increase. There is at least a gap of USD 100-160 /tonne between exports and domestic prices across various products. The only destination which remained active for flat products was Europe/UK,” said a trader.
March Volumes
Provisional export volumes in March were 1.8-1.9 mn t. Sources indicate that April’s export volumes may not be very high because many of the mills did not book enough volumes on the back of expected higher domestic demand. However, the scenario in the domestic market has changed somewhat with India experiencing a devastating second Covid wave that is leading to regional lockdowns and which may hamper demand.
In May, therefore, export levels may be reasonably good and June will depend on how the situation pans out and based on that mills will book their export cargo, it is heard.
“Exports will to continue for a while but a lot depends on how the domestic market behaves in May,” said a trader.
~Madhumita Mookerji
Source:SteelMint
