India’s pig iron exports drop over 50% in CY22; likely to recover in near term

• Export tax impacts overseas sales
• Production remains stable y-o-y in 2022
• Exports seen resuming, production may rise 1-2 mnt this year

Morning Brief: India’s pig iron exports nosedived by more than 56% to around 0.57 million tonnes (mnt) in calendar year 2022 (CY22) against 1.30 mnt recorded in 2021, reveals data maintained with SteelMint.

Key importers

China, from the leading importing country in 2021, saw its volumes plunge a huge 89% to 0.03 mnt last year from a voluminous 0.29 mnt in 2021.

The US became a leading importer in 2022 with a share of 0.30 mnt, increasing 43% y-o-y from 0.21 mnt in the preceding year. Oman was the second-largest importer with 0.07 mnt, showing a growth of 17% against 0.06 mnt in 2021. India exported 0.05 mnt each to Egypt and the UAE – two countries that did not import in 2021.

What factors dragged down pig iron imports?

Export duty impact: The 15% export duty, slapped in the third week of May, last calendar, had widespread ramifications on Indian pig iron exports. Leading exporters saw their overseas sales become unviable and plunge by over 50% in the period under review. Vedanta, which was the highest exporter in 2022, experienced a 60% drop in volumes to 0.16 mnt against 0.4 mnt in 2021. Similarly, JSPL’s volumes nosedived 61% to 0.14 mnt from 0.36 mnt in the previous year while JSW witnessed a 67% decline to 0.03 mnt against 0.09 mnt in the period under review. RINL also saw a 33% decrease to 0.04 mnt (0.06 mnt) while Bhushan Power & Steel’s volumes dropped 46% to 0.07 mnt (0.11 mnt). The Rashmi Group, which had exported 0.15 mnt in 2021, did not undertake any overseas sales at all last year.

Higher domestic realization: At the same time, producers in India preferred to sell in the domestic market as realisations at home were higher compared to exports which were made unviable by the 15% duty. Domestic average

prices of steel grade material, ex-Durgapur, rose to INR 47,552/t ($581/t) in CY22 compared to INR 38,475/t ($470/t) in CY21.

China reduces imports: China’s imports from India plunged 89% y-o-y because of the Covid surge, production cuts and overall drop in demand from the real estate sector. China has been a habitual buyer of Indian pig iron since 2019, data shows.

Indian pig iron market overview

Production of the commodity remained stable y-o-y at 5.85 mnt in CY22 (it was 5.86 mnt in the preceding year).

The leading producers were JSPL with 0.65 mnt (up 24% from 0.52 mnt in 2021), followed by SAIL with 0.45 mnt, showing a 29% drop from 0.64 mnt in the previous year. The Tata Group’s volumes rose 7% to 0.15 mnt (0.14 mnt) and JSW’s plunged 61% to 0.10 mnt (0.26 mnt).

The share of exports in the total production dropped to 10% in 2022 against 22% in the previous year.

Outlook

Exports of pig iron from India are likely to rise in the short to medium term, with the export duty roadblock removed. The first export consignment post-duty removal – of 50,000-tonnes, and with the US as destination – was booked late last year by a western India-based mill.

More deals are expected to follow.

India will produce 128 mnt of crude steel in CY23, as per SteelMint estimates, with a BF-BOF:EAF-IF ratio of 46:54. Hot metal production will touch around 85 mnt this year, up 7-8% from CY22.

Concurrently, production of cold and foundry-grade pig iron would rise by another 1-2 mnt to an estimated 7-8 mnt (from the current 6 mnt) in CY23, fuelled by strong demand from the engineering sector.