Indian Steel Makers Explore Export Options Amid Low Domestic Demand

On 01 Dec’16, Indian manufacturers had raised the flat product prices by INR 3000/MT owing to higher production cost. However, domestic steel demand continues to remain lacklustre.

Even the sales volume in India’s domestic steel market has fallen drastically owing to cash crunch in steel market post currency demonetization.

High inventory levels, rising production and declining domestic consumption has compelled Indian steel manufacturers to seek export options.

Reasons behind Indian steel manufacturers exploring export options:

1. India’s finished steel consumption drops by 14% M-o-M – India’s consumption of total finished steel stood at 6.12 MnT in Nov’16, down by 14.3% M-o-M. In Oct’16, the same stood at 7.11 MnT.

2. Rising crude steel production of major Indian steel makers – Steel giant – JSW Steel has registered 45% Y-o-Y growth in its crude steel production and was recorded at 1.23 MnT in Nov’16 compared to 0.85 MnT in Nov’15.

On similar lines, JSPL’s crude steel production stood at 0.88 MnT inQ2 FY17 compared to 0.8 MnT in Q1 FY17.
Thus registering a 10% quarterly growth.

SAIL has also recorded the highest ever Q2 saleable steel production at3.492 MnT, with a growth of 31% Y-o-Y.

3. Indian HRC export offers down by USD 15/MT – Recently an east coast based steel maker has concluded a deal of 30,000 MT HRC at USD 500-505/MT,CFR Vietnam which is equivalent to USD 485-490/MT, FoB India.Despite lesser realizations compared to European markets, Indian steel makers are seeing exporting HRC to South East Asian Countries.

Earlier,Indian manufacturers were catering the Europe market and offers were in the range of USD 505-510/MT ,FoB India.

HRC export offers as on 09 Dec’16

Prices in USD/MT
Source: SteelMint Research