Finished steel exports by Indian mills were recorded at 0.743 million tonnes (mnt) in April 2022, down 38% compared with 1.195 mnt a month ago. The same declined by 22% against 0.951 mnt in April 2021, as per provisional data released by the Joint Plant Committee (JPC) under the Ministry of Steel.
Export volumes were impacted due to:
- Slow demand from Middle East, Europe: The Russia-Ukraine crisis led to a supply gap and opened export opportunities for Indian mills mainly for the European market. Meanwhile, Indian companies actively exported steel to the UAE along with EU countries fetching higher net sales realisations (NSR) in January-March. This led to exhaustion of quotas in the EU and buyers too were facing liquidity issues, impacting their ability to open Letter of Credits (LCs) with banks towards the end of March. Meanwhile, UAE buyers shifted to domestic procurement amid higher Indian offers and logistical issues surrounding vessel and container availability, which weighed on exports in April.
- Lucrative offers from China: Recently, China returned in the exports market with lucrative offers, thereby making it difficult for Europe and other importing nations like Vietnam to accept prices offered by Indian mills. For instance, China’s HRC export prices in April were at $900/t FOB China levels while Indian HRC export index stood at $970/t FOB east-coast basis.
- Muted demand from Vietnam: Vietnam is a traditional importer of flat steel from India. However, Indian mills refrained from offering in the market since January with the comeback of European buyers who were even accepting higher offers. Furthermore, offers from domestic steel producers- Formosa Ha TInh and Hoa Phat enticed buying interest compared to imported HRCs due to the longer lead times and logistical hurdles.
Crude steel output down 10% m-o-m in April
Indian mills churned out 9.851 mnt of crude steel in April, lower by 10% against 10.936 mnt in March. However, on an annualised basis, production rose by 3% from 9.551 mnt in April 2021. The drop in crude steel production m-o-m was mainly due to disruptions in production caused due to coal shortage amidst higher prices and limited availabilty along with the union strikes seen at the begining of March. For instance, Rashtriya Ispat Nigam Ltd (RINL) was only operating one blast furnace in the first week of April due to labour strikes. The company’s crude steel production, as per JPC, stood at 0.289 mnt in April, down by 26% in contrast with 0.39 mnt in March.
In addition, increased electricity costs on the back escalating thermal coal prices raised production costs and prices of finished steel too, while demand was weak, making it difficult for mills to maintain capacity utilisation rates.
Finished steel production drops 11% in April
Indian mills reported a fall of 11% in finished steel production to 9.350 mnt in April, against 10.556 mnt in March. Demand for finished steel in the domestic market was weak last month due to higher prices. Mills like AM/NS India and JSW Steel raised HRC and CRC prices by INR 5,000-10,000/t for sales in April due to increased input costs. However, this hike was not absorbed in the downstream market, resulting in poor demand and hence, lower production volumes. Meanwhile, finished steel production inched up by 1% from 9.266 mnt in April 2021.
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