Exports of pig iron by Indian steel producers increased by a huge margin of 169% to 1.03 mn t in FY21 compared to just 0.38 mn t in FY20 mainly on account of higher Chinese buying, SteelMint data shows. China’s imports of pig iron from India increased to 0.63 mn t in FY21 vis-à-vis 0.18 mn t in the previous fiscal.
The Chinese economy recovered fast after the lockdown restrictions were lifted what with the government announcing a stimulus package to boost metals-intensive infrastructure. Downstream demand in China outpaced supply resulting in a flood of semi-finished steel imports.
In fact, Chinese demand started peaking when the rest of the world was in the grip of the virus, with India going on lockdown from end-Mar’20.
Indian integrated steel producers survived mainly on exports to China in Q1 FY20 in the absence of domestic demand, while production could not be suspended in continuous process industries such as steel.
China apart, other destinations for Indian pig iron exports were Italy, Bangladesh and the US. However, volumes were no match to that of Chinese imports. Imports by Bangladesh tanked 52% in FY21 to 0.09 mn t compared to 0.18 mn t in FY20 owing to the severe impact of the pandemic on the neighbouring country’s manufacturing sector and demand for metallics.
Top exporters
Among exporters, JSPL led from the front with 0.38 mn t of pig iron exports in FY21. However, leading steel producer JSW Steel and metals major Vedanta witnessed a sharp spurt in volumes by 749% and 109% respectively. While Vedanta recorded exports at 0.23 mn t, JSW was not far behind with 0.17 mn t. Rashmi Group entered the exporters’ club in FY21 with 0.10 mn t of shipments even as state-owned RINL posted a net 109% rise in exports to 0.06 mn t in FY21.
Outlook
As SteelMint has previously reported, China’s Finance Ministry has tweaked its import tax policy on 28 Apr’21 cutting the existing 2% import duty on non-ASEAN origin steel billet and slabs to zero, and slashing the pig iron import tax from 1% to zero from 1 May’21. As a result, Indian pig iron exports to China are expected to remain elevated in FY22, SteelMint notes.
As China’s gets cracking on carbon emissions and targets crude steel production cuts, while safeguarding domestic supply through imports of metallic products, Indian exporters can look forward to increased demand from the world’s top steel producer in the months to come.
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