India: Steel billets export shipments fall 30%, y-o-y, in FY22

India, one of the leading exporters of steel billets, witnessed a significant fall in shipments in FY22. The volumes stood at 5.05 million tonnes (mnt) in the period under review, a 30% y-o-y fall as against 7.25 mnt in FY21, as per customs data collated by SteelMint.

China leading importer but volumes fall sharply

China continued to be the largest importer of steel billets from India at 1.15 mnt in FY22. However, the volumes dropped sharply by 64% on year as compared to 3.23 mnt in the same period last year.

India’s billets exports took a hit in FY22 due to rampant steel production curbs in China, preference for domestic billets, and weak demand.  Also, a high base of Chinese billets imports in CY20 resulted in a hike in exports in the previous fiscal year (FY21).

Nepal mills reduce billets bookings on high sponge iron demand

Nepal acquired the second position among the top importers with 0.82 mnt in FY22 followed by Kenya with 0.57 mnt. India’s steel billets exports to Nepal fell by 23% y-o-y.

Nepal has substantially increased sponge iron sourcing from India in recent years. Last year, the Nepal government slashed customs tax and excise duty on imported sponge iron to zero for FY22 from 5% earlier, citing the need to facilitate domestic manufacturing growth. This encouraged local induction furnace steel producers to import more sponge iron. Taking advantage of the duty removal, several steel producers in Nepal either came up with expansion plans or considered setting up their own induction furnaces to save production costs. Thus, sponge iron sourcing from India increased in recent times and billets demand from the country has naturally gone down.

Other major factors weighing down Indian billets export bookings-

• Bid-offer disparities: Higher bids for steel billets from the Indian domestic market in FY22, most probably from September 2021, kept export bookings low.
• Higher realisations in domestic finished market: Indian mills had raised long steel prices sharply in FY22. The yearly average of SteelMint’s BF-route rebar price assessment was recorded at INR 56,200/t exw-Mumbai, a sharp on year rise of INR 13,129/t. Also, SteelMint’s daily steel billets (IF-route) index was assessed at a yearly average of INR 44,590/t exw-Raipur in FY22, up INR 12,136/t y-o-y. Thus, higher domestic finished long prices kept price expectations on the higher side even for billets export bookings. Indian mills were not ready to reduce billet offers considering the high input costs. On the other hand, the yearly average of SteelMint’s assessment of BF-route billet (150mm) exports increased sharply from $444/t FOB in FY21 to $627/t in FY22.

Outlook

India’s steel billets exports are expected to remain higher in the near-term, mainly supported by the supply curbs amidst the Russia-Ukraine political tensions and the recent announcement of export tariffs on various products, including steel, by the Iranian government. However, realisations in the domestic market may weigh down export bookings.