Indian HRC and plates exports in Jan-Jun’21 (first half or H1) were down 13% to 3.19 million tonnes (mn t) against 3.67 mn t seen in the same six months of CY’21.
If we consider the quarter of Apr-Jun’21, then exports of the materials were also down 30% to 1.79 mn t against 2. 54 mn t recorded in the same quarter in CY’20.
On a m-o-m basis, exports were, however, up more than 20% to 0.71 mn t against 0.59 mn t in May’21. But, y-o-y, there was a 40% decline compared to 1.19 mn t in Jun’20.
In CY’21, HRCs and plates comprised the highest share of the total flats exports. For instance, in the entire finished flats exports volume of 6.04 mn t, HRCs and plates hogged the lion’s share of 3.19 mn t. Similarly, in H1 CY’20, in the entire volume of 4.95 mn t, HRC and plates comprised the highest at 3.67 mn t.
Highest importers
In H1CY’21, Belgium was the highest importer of total finished flat products at 1.20 mn t. Other key importing countries were Italy and Vietnam.
Why did HRC exports drop in H1’21 y-o-y?
- Last year, the market was not prepared to handle the Covid lockdown, Mar’20 onwards, when India went into one of the strictest Covid lockdowns. Domestic sales had nosedived to nil, goading mills to survive only exports. In comparison, this year, the mills and market were better prepared to handle the lockdowns, which allowed them to liquidate material in the domestic market to an extent, especially in the initial period of the second wave. They were better equipped to continue their supply chain dynamics, maintaining Covid protocol to reach the material to the end-user. Domestic HRC trade prices had increased too on demand recovery, especially Jan’21 onwards.
- Volatile benchmark Shanghai Futures Exchange (SHFE) steel futures on the back of the Chinese government’s crackdown on runaway commodity inflation kept the mills guessing on prices. pushing them to the sidelines.
- Lower vessel availability and historic freights acted as export dampeners. Freights spiralled up easily 40% on scarce vessel supply. Vessel hire charges per day averaged $40,000/day around May-June, 4-5 times higher than rates quoted in Apr’21. Chinese ports tightened quarantine rules for Indian ports which added to the landed costs of Indian HRC exports.
- Chinese HRC offers too had inched down, towards end-May’21, hovering around $940-945/t, even touching $930/t in end-Jun, down $60/t from their week-ago prices, putting pressure on Indian export prices. That apart, globally, buyers went into a wait-and-watch mode awaiting clarity on a rumoured Chinese export tax imposition, which had slowed down the market slightly.
- Vietnam, a key flats market for India, started preferring domestic materials since the latter was competitively priced against imports.
- A sudden Russian export tax proposal from Aug’21 made Russian exporters active in offloading their material at rates as low as $866-870/t. Vietnam buyers were attracted to such lowered offers, putting Indian mills on the backfoot.
- The European Union’s (EU’s) extension of the safeguard measures for another three years dampened flats exports sentiments.
Short-term outlook
HRC and plates exports may stay somewhat under pressure since mills have exhausted their EU quota and need to scout for newer markets. The HRC quota of around 1.66 lakh tonnes for Apr-Jun’21 was exhausted much before the quarter closed.
Covid cases are rising in Vietnam and other South East Asian countries which may limit demand in these countries, creating a case for dull HRC sales from India.
~Madhumita Mookerji
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