Indian bulk HRC export shipments drop 33% in Sept on higher domestic realizations

India’s bulk HRC export shipments declined by 33% in Sep ’20 to 531,641 t in contrast with 762,395 t a month ago, according to the data maintained by SteelMint. The volumes have come down for the third consecutive month after hitting an all-time high in July ’20. Tata Steel remained the largest exporter followed by JSW Steel, AM/NS India, SAIl and others.

Why are export volumes falling continuously?

• Higher domestic realizations- Indian steel manufacturers turned their focus towards the domestic market on short supply and improved demand in early-July. The unlocking phase in the country led to an increase in restocking demand after 3 months of strict lockdown. The mills had increased their list prices of HRC and CRC twice in Sep ’20 with an exception of SAIL doing it for the third time. Meanwhile in Oct mills have raised HRC prices by INR 1000/t.
  
• Supply crunch- Indian steel market has been facing a shortage of thinner gauge of HRC as higher exports were made in previous months amid lockdown impacted domestic market. After Jul, domestic demand picked up, while the mills deferred Aug shipments to Sep to cater to the domestic market.
• Recovery in domestic demand- Maruti Suzuki India Limited (MSIL), India’s largest car seller, has reported 30.8% (y-o-y) growth in its Sep sales at 160,442 units against 122,640 units in Sep ’19. Hero MotoCorp registered record sales of 715,718 units in Sep’ 20, its highest sales in a single month in the calendar year of 2020.

Country-wise export shipments- Bulk HRC export shipment volumes to China witnessed a massive 64% m-o-m decline to 156,692 t in Sep ’20. Followed by a significant 44% decline to Vietnam at 100,400 t in contrast with 180,547 t. However, the volumes increased by a whopping 219% to UAE at 126,095 t compared to 39,500 t a month back.

Port wise exports in Sep ’20- In Sep ’20, HRC export cargoes have witnessed an m-o-m decline at most of the major ports viz Dhamra at 74,421 t (down 53%), Hazira 101,800 t (down 31%). However, loading volumes increased at Paradip port at 163,644 t (up 28%) and Mormugao at 93,425 t (up 27%).

Outlook- With the arrival of the festive season, sales of white goods and consumer appliances are expected to pick up in the domestic market. Also, major steel companies will largely focus on domestic sales in Nov and Dec and may limit export allocations. Also, ongoing Chinese holidays have turned market inactive in last one week. We expect export shipments to further decline in the coming months.