Total global seaborne steel trade (including flats, longs and semis) in 2020, as per WSA data, was around 400 mnt. The volume in 2021, which is still awaited, is expected to rise 5-7% to 420-430 mnt, as per SteelMint’s estimates.
Top exporters
Data maintained with SteelMint indicates that in 2021, despite the export rebate withdrawal and production curbs, China was the top exporter with 66.91 mnt, up 25% over 53.67 mnt in 2020. Japan was a distant second with 30.63 mnt up, up 7% against 28.54 mnt in the preceding calendar while Russia stood third with 30.29 mnt (26.85 mnt), up 13% y-o-y.
Data also reveals that among the global top 20 exporters, barring South Korea, Belgium and the Netherlands, all countries’ export volumes headed north y-o-y.
Top importers
The top 20 global importers’ total volumes were at 246 mnt, y-o-y up 14% against 215 mnt in 2020. The EU was the top importer with 34 mnt (32 mnt), inching up 4% y-o-y. However, this volume does not include the Europe intra-trade but only the seaborne component. The US was the second-highest, at 25.31 mnt (16.69 mnt), up 52% y-o-y. In third spot was Italy with 17.05 mnt (13.05 mnt), rising 31% y-o-y. China was in the eight spot with a 31% y-o-y drop to 11.97 mnt (17.35 mnt) as its carbon goals and energy crisis restricted production.
Except for China and Vietnam, rest of the top 20 countries showed y-o-y rise in imports as they swung into revival mode post-lockdowns.
Russia-Ukraine conflict’s impact on trade flows
- Russia-China status quo?: This trade flow will not be impacted much, with China adopting the middle path in its response to Russia’s invasion of Ukraine, possibly because of economic compulsions. Even though China does not particularly buy finished steel from Russia, it is among the top four scrap and metallics and ferro chrome buyers and second-largest thermal and coking coal procurer from Russia.
- EU impact: The EU is the world’s largest steel importer. Most of its imports emerge from the CIS countries, especially Russia and Ukraine. The EU-28 is Russia’s largest buyer of finished steel, scrap and metallics, ferro alloys, coking and non-coking coals.However, the western nations’ sanctions on Russia may upset the EU flow and divert these volumes to Asian countries. After all, Russia is the third-largest steel exporter in the world after China and Japan. And, Russia and Ukraine combined control almost 45 mnt or 10% of the nearly 400 mnt of the total global seaborne steel trade.But, EU and US sanctions will block this channel. Russia, even if it cuts production, would now have to seek alternate markets for diverting the 9-odd mnt of finished steel it was selling to EU to other geographies, mainly Southeast Asia and North Asia.
- Larger Asian play: Asian countries have not made any noises about sanctions on Russia yet. But, trade circles say there is a sense of panic among European mills and downstream users. Already, enquires for pellets are pouring into India and the scope will soon widen to include finished steel as well. The EU operates through the quota system and India’s quarterly cut-off is around 0.5 mnt, which once breached, attracts the 25% safeguard duty on the buyer’s account. However, sources indicate that EU buyers are urgently looking to book Asian cargoes, including from India and even non-quota countries.
Logistics realignment
Trade circles say that a major realignment in vessel movement is likely. The lead time for carrying Russian steel to Asian destinations will be longer compared to Europe and thus freight will increase.
That apart, the surge in crude oil prices to seven-year highs means a fresh spike in shipping costs.
Outlook
There is no clarity on how the trade pattern will remain even in the short term. As per latest reports, Russian missile attacks are shutting down Ukraine’s steel plants and port and rail transportation which will majorly disrupt supply to the EU.
But, in the short term, Indian mills may benefit from EU’s increased interest.
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