Posted on 04 Jan 2022
India’s imports of different kinds of steel products (semi-finished, finished flat and finished long) were recorded at 3.64 million tonnes (mn t) in the first 11 months of CY’21 (Jan-Nov’21), as per data maintained with SteelMint. Compared to Jan-Nov’20, imports have picked up by 5.8% y-o-y.
Imports in Nov’21 stood at 0.26 mn t, down 7% m-o-m and 30% y-o-y. It is estimated that imports in Dec’21 will reach around 0.26 mn t, thereby, amounting to 3.9 mn t in CY’21 (Jan-Dec’21). Thus, import volumes, this year, may see a marginal 1% increase on a yearly basis as against 3.84 mn t seen in CY’20.
Imports in Dec’21 fall 38% y-o-y: Considering the estimated figure, import volumes in Dec’21 would see a sharp 38% y-o-y fall compared to 0.42 mn t seen in the corresponding period last year. However, in comparison with Nov’21, imports remain stable.
An overview on steel imports in Jan-Nov’21
Commodity-wise –
a) Finished flat: India’s finished flat steel imports were recorded at 3.38 mn t in the period under review. The volumes rose by 25% y-o-y against 3.08 mn t in the same period last year.
b) Finished long: Finished long steel import volumes remained stable y-o-y at 0.22 mn t in Jan-Nov’21.
Country-wise –
South Korea was the largest exporter of steel products to India in Jan-Nov’21 with 1.92 mn t, recording a rise of 23% compared to the same period last year. However, shipments have slowed down in the last couple of months.
Japan overtook China to become the second largest steel exporter to India. Exports shipments from Japan inched up marginally by 0.8% to 508,683 t while those from China fell sharply by 38.1% to 354,553 t in Jan-Nov’21.
Factors weighing down China’s exports-
i) Tight steel production restrictions left mills with limited inventory which propelled them to limit their export allocations.
ii) Withdrawal of 13% export rebate on 146 steel products (including HRCs, wire rods, rebar, galvanised sheets and others).
iii) With only a handful of Chinese mills providing BIS certified HRCs, Indian mills refrained from booking imported material.
South Korean, Japanese mills catering to domestic demand
India’s steel imports majorly comprise API grade HRCs used in government infra projects and a smaller share of electrical steel. Such grade of HRCs come from South Korea and Japan. However, there has been a slowdown in steel export volumes of these countries since Oct’21.
South Korean mills are catering to the rising demand from the ship building sector while Japanese mills are largely offering their material in the domestic market on better realisations.
Domestic demand subdued, consumption slows down
Steel demand for the past few months has been tepid after domestic steel prices touched their highest levels in Oct’21. To entice buying interest, major steel mills cut list prices for Dec’21 deliveries. However, this sluggishness in demand is expected to be continued till Jan’22.
On the other hand, India’s Industrial Production Index (IIP) grew by just 3.2% y-o-y in Oct’21 at the slowest pace in eight months, data released by the Ministry of Statistics and Programme Implementation shows. The output of the manufacturing sector, which accounts for over three-fourth of the total weight of the index, grew by a mere 2% y-o-y in Oct’21.
The demand recovery is still being seen as tentative as the Omicron variant of Covid-19 could be a disruptor in the coming months. Going ahead, IIP is expected to further go down, at least by 3% in Nov’21 in spite of a low base (-1.6% y-o-y in Nov’20), as per chief economist of a leading credit rating agency.
Outlook
With several steel expansion projects in the pipeline, India’s steel production will increase by roughly 13 mn t in the coming year, SteelMint understands. Furthermore, Indian Steel Association has predicted that India’s crude steel output in CY’22 may reach around 124-125 mn t levels.
Thus, with this rapid increase in steel output, it is expected that India’s steel imports will remain range bound in CY’22 unless if demand for a specific grade product arises.
Source:SteelMint
