- Export volumes see 18% fall y-o-y
- Billets exports impacted by RINL’s lower production, China’s competitive pricing
- Vietnam’s increased focus on domestic material reduces import volumes
- Full impact of export tax to be felt in July
Morning Brief: Indian steel exports remained largely stable m-o-m in May, 2022 at about 1.50 million tonnes (mnt).
Finished flats showed a negligible rise to 1.06 mnt in May against 1.04 mnt in April. Likewise, longs inched up to 0.11 mnt in May against 0.10 mnt in the previous month. However, semis dropped almost 12% to 0.29 mnt compared to 0.33 mnt in the period under review.
Exports in January-May, 2022 totalled 7.27 mnt, dropping 7% compared to 7.83 mnt in the same period in 2021.
Highlights
Previous bookings keep volumes stable m-o-m: Volumes remained stable in May m-o-m essentially because most of the bookings had been done previously and mainly to Europe. Thus, the Continent still remained the highest importer of Indian steel. Even though the consignments attracted the 15% export duty from 22 May, 2022, the volumes were shipped.
RINL’s role in lower billets exports: Billets (semis) volumes showed a m-o-m drop in May because Rashtriya Ispat Nigam Limited (RINL), a major exporter of billets, had seen production dropping with one of its three blast furnaces out of operation for quite some time.
Moreover, thanks to China’s lockdown, it was exporting billets at competitive prices which dented Indian mills’ prospects in South East Asia.
However, even though blast-furnace-route billets export were hit because of reduced RINL play, induction-furnace (IF)-grade billets saw heightened activity to Nepal. This neighbouring country experienced power outage issues as a result of which mills there avoided importing sponge iron from India and opted directly for billets.
Exports to Vietnam drop sharply m-o-m: Exports to Vietnam dropped 63% m-o-m in May. Three factors propelled this drop. One is the end-users’ preference for domestic steel at lower pricing. Secondly, China exported in large volumes to Vietnam at highly competitive rates. Thirdly, the EU quotas have limited imports. Vietnam mills used to procure HRC considerably from India, value add for onward exports to the EU. However, the quotas are now limiting such sales. These volumes are thus possibly returning to Vietnam’s domestic market.
Outlook
June and July export volumes are slated to take a hit. While June volumes will be lower compared to May, the actual impact of the export tax will start showing from July. This is because June has seen only sporadic bookings, especially of boron-added steel, and that too in small parcels. Total volumes booked so far in June amount to a mere 140,000 tonnes of HRCs.
Therefore, July export volumes are expected to stay below 1 mnt.
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