Indian mills have collectively booked about 1.14 million tonnes (mnt) of HRCs for Feb-Mar’21 shipments. Estimated export volumes stood at 0.55 mnt for February and 0.59 mnt for March shipments respectively, sources informed SteelMint.
Why have exports increased?
1. Rise in global HRC offers: Global HRC export offers have been on a rise since the beginning of Jan’22 when prices had started to recover from the descent seen in early-Dec’22 levels.
For instance, in the 2nd week of Feb’22, Japan’s HRC export offers increased to $855/t FOB levels, from $785/t FOB seen at the beginning of January and $810/t FOB in early-December. Whereas, China’s HRC export offers stood at $793/t FOB at the beginning of Feb’22, an increase of $10-30/t compared to $765/t FOB seen at the beginning of Jan’22 and $780/t FOB in early-Dec’21.
However, these two countries, along with other major exporters like South Korea, have been primarily focused on their domestic market needs. Where China is facing production restrictions to reach net-zero carbon emissions by CY’30, South Korea is focused on improved demand from its shipbuilding industry. The Japanese mills too have limited room for export bookings amid better domestic demand with the economy recovering from the Covid-19-induced slowdown.
2. EU comeback: Indian mills had exhausted their European quotas in the very first five months of CY’21. However with the new year in place, Indian steel mills have been actively concluding deals to the EU.
Moreover, European domestic steel manufacturers are facing issues like rising power costs which are pushing up prices of end-products . Also, EUROFER forecasts the apparent steel consumption to increase at a moderate pace of 3.2% in CY’22 which is likely to support demand from the region.
3. Indian HRC export offers up, cost push also supports: The export offers from Indian steel behemoths remain competitive against most of the other major exporting nations. SteelMint’s HRC export index rose to $867/t FOB levels yesterday, over active bookings made by Indian mills to Europe, Turkey, Egypt and Nepal. The HRC export index stood at $725/t FOB east coast towards end of December and $780/t towards the last week of January.
Furthermore, the increase in offers is linked to factors like rising raw material costs, recovering overseas demand, and a decline in competition from other major exporting countries.
India’s total steel exports stood at 20.5 mnt in CY’21. Amongst the three export segments, finished flats’ share was the highest in 2021, at 12.40 mnt, a 25% y-o-y increase. In CY’21, India’s export volumes aggregated to 20.54 mnt out of which the largest share of exports belonged to Europe at 33% with volumes of 6.42 mnt followed by Southeast Asia and Middle East at 4.16 mnt and 3.91 mnt respectively.
4. Active buying interest from Turkey: Indian HRC export bookings have seen a significant increase for Turkey on limited supplies & strong demand. Indian mills are offering around $910-920/t CFR Turkey, up by a significant $30-40/t against the previous deal reported at $870-890/t CFR for early March delivery.
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