Posted on 19 Oct 2021
The benefits to Indian mills of higher Chinese steel prices resulting from curbs on Chinese production and/or higher energy costs will be limited on account of high logistics costs and challenges such as container shortages. So says India Ratings & Research (Ind-Ra).
“The [environmental policy-driven] fall in China’s steel output and India’s imports of intermediate steel products would benefit Indian steel players by way of lower import risks and greater export opportunities,” Ind-Ra says in a note seen by Kallanish. “The changes in China’s energy policy related to the price band for power could cause a key structural shift within the sector, thereby supporting steel prices in the international as well as domestic markets.”
Lower Chinese exports, prevailing trade tensions between China and the West, the Biden administration’s proposal for a $2 trillion infrastructure bill, and healthy EU steel demand should prove beneficial for Indian steel players, the credit rating agency observes.
Despite the energy crisis, China is unlikely to relax import restrictions on Australian coal in order to ease supply (see Kallanish passim). There are approximately 4-5 million tonnes of thermal coal, as well as additional coking coal in Chinese ports originating in Australia that cannot be cleared.
Source:Kallanish
