India’s finished steel exports fell significantly by 19% m-o-m to 0.638 million tonnes (mnt) in June 2022, compared to 0.792 mnt a month ago. On an annualized basis, the same plunged 53% in contrast to 1.369 mnt seen in June 2021, as per the provisional data released by Joint Plant Committee (JPC) under the Ministry of Steel.
Recent developments in the exports market:
Competitive offers from Russia: Russia’s export offers were highly competitive compared with China and India during June 2022. This, in turn, has dampened the sentiments in the exports market. For instance, Russia’s Black Sea HRC (SAE1006) offers were at $590/t FOB levels in late-June 2022, against $750/t FOB seen in late-May 2022.
Chinese HRC export offers, too, remained competitive amid sluggish demand from the domestic market. Moreover, demand from the construction sector remained weak post-lockdown. China’s HRC (SS400) offers stood at $675/t FOB in late-June compared to $780/t FOB levels in late-May.
Export duty levy by Indian government: Towards end-May 2022, the Indian government imposed a 15% export duty on clad or plated non-alloyed flat steel products with the aim to increase supplies in the domestic market and counter rising inflation. This has put a dent on the country’s steel exports and a major correction in steel prices has been seen in the domestic market during the period. Subsequent to the announcement, Indian mills started offering alloyed (boron-added) hot rolled coils (HRCs) for exports to the key export markets to avoid the duty.
Limited buying from importing countries: The continual decline in global HRC export offers in the past couple of months has pushed overseas buyers to the sidelines. Buying interest in the markets of Vietnam, the Middle East (ME) and European Union (EU) has remained subdued. Major concerns were high power costs in the EU, inclusion of Vietnamese hot-dipped galvanised (HDG) iron in the EU’s quarterly quota, and good inventory levels with buyers in the UAE. Other than these, low acceptance for boron-added HRCs in the Middle East and EU markets weighed on the export volumes.
Crude steel production down 2% m-o-m in June
Crude steel production by Indian mills stood at 10.45 mnt in June, down marginally by 2% against 10.62 mnt in the previous month. However, production rose 12% y-o-y from 9.37 mnt in June 2021.
Production volumes dropped on the back of a decrease in output by Indian mills according to provisional data released by JPC. For instance, SAIL’s crude steel production fell 6.3% m-o-m to 1.395 mnt and combined production volumes by AM/NS, JSW Steel and JSPL declined 5.2% m-o-m to 2.921 mnt in June 2022.
Indian mills were unable to sell volumes due to buyers’ anticipation of further fall in prices. This has led to building up of inventories, forcing mills to cut production by opting for maintenance shutdowns. Moreover, it is anticipated that crude steel production will decline by 10-15% in July.
During April-June 2022, crude steel production by Indian mills jumped 12% to 31.391 mnt as against 27.986 mnt in the corresponding period last year (CPLY).
Finished steel production at 9.71 mnt in June
India’s finished steel production stood at 9.71 mnt in June, down 2% compared with 9.927 mnt in the previous month. However, the same rose 11% y-o-y against 8.73 mnt in June 2021.
Finished steel production increased by 10% y-o-y to 29.164 mnt during April-June 2022, as against 26.476 mnt seen in April-June 2021.
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