India’s total steel exports in Jul’21 were at around 2.4 million tonnes (mn t), up around 11% compared to 2.16 mn t registered in Jun’21. The m-o-m increase has surprised market circles since the expectation was that there would possibly be a drop.
Why did exports rise in July?
Jul’21 export figures have been primarily driven up by sales to Europe. The maximum volume of around 30% was contributed by Europe Union countries.
It may be recalled that the Indian mills had exhausted their full quota to Europe in the first five months of the current year. However, the bookings happened earlier and a lot of the shipments took place in Jul’21, thereby inflating the figures. The maximum volumes mills could export to EU in CY’21 was 2.50 mn t. However, data maintained with SteelMint reveals the mills overshot this by almost 7% to 2.67 mn t.
In April, when the second wave started resurging in India, leading to lockdowns, mills, faced with demand slump at home, booked large export volumes to avoid inventory pile-up. Europe, recovering from its lockdowns at that juncture, started buying heavily from India. Mills were able to sell at a relatively lower prices compared to other exporting countries.
EU releases its quotas at the beginning of each quarter. However, the exports can exceed this cap. Only the importer has to pay a 25% safeguard duty on the excess material. Since the Indian mills had booked at relatively lower prices, the importer did not mind paying that extra 25% duty on the landed cargo.
Even if the material gets shipped, it is not always immediately taken delivery of by the importer. Till the time the importer takes delivery, the cargo lies in bonded warehouses. “These materials had perhaps been booked at higher prices earlier and now if the importer pays that 25% safeguard duty the cost will go up further. So, the importer would rather wait for the new quarter to begin, when fresh quotas get announced, creating headroom for fresh exports. If the importer takes delivery in July when quotas are announced, he avoids paying that extra 25%,” said a source. The traders too were ready to take the risk of that 25% extra charge on the buyer’s account, or allow the material to lie in the warehouses.
Country-wise: Turkey volumes rise
Sales to European countries accounted for a high 30% of the total exports.
Exports to Vietnam remained more or less stable at around 2 lakh tonnes while that to Turkey was relatively high at 1.74 lakh tonnes compared to 91,000 tonnes in Jun’21, since Indian mills had to scout for alternate destinations because of a dull domestic market.
Exports to China dropped to a little over 1 lakh tonnes because of vessel issues. Prices to China were also lower because of the export tax uncertainty which kept them away from imports.
Company-wise: JSW Steel highest exporter *corrected
The highest exporter in the month under review was JSW Steel with 4.88 lakh tonnes, followed by AM/NS India at 2.92 lakh tonnes. Bhushan Power and Steel was the third highest exporter at 2.40 lakh tonnes, while Jindal Steel and Power was fourth with 2.33 lakh tonnes. JSW Steel Coated Products came fifth with 1.48 lakh tonnes. Among the two state-owned players, Rashtriya Ispat Nigam Limited (RINL) was at sixth position with 1.40 lakh tonnes, followed by Steel Authority of India (SAIL) with 1.35 lakh tonnes. These top seven exporters enjoyed almost 70% or 1.68 mn t of the total 2.4 mn t exports.
Product-wise: Flats enjoy largest share
The share of flat products was the highest at around 1.4 mn t, while longs were at 0.25 mn t and billets at around 0.23 mn t.
Within flats, the maximum chunk comprised of hot rolled coils (HRCs) at 8.24 lakh tonnes. Interestingly, galvanised steel exports were relatively higher than in previous months, at 4 lakh tonnes. This was due to the fact that Indian mills, after exhausting their HRC quotas, started exporting galvanised steel to Europe. Under normal circumstances, GI exports range between 2-2.5 lakh tonnes per annum.
Prices as on 9:00 IST, 23 Aug. d-o-d changes indicated against closing price of 20 Aug.
*corrected: Company-wise export figures were incorrectly mentioned which have been corrected
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