Indian mills have exhausted their entire CY’21’s flat steel exports quota to Europe in first five months of the calendar. Therefore, sales to this geography will be highly limited, if at all, for the rest of the year, SteelMint assesses.
But, the high volumes have caught the attention of Eurofer which may seek an anti-dumping investigation into Indian HRC imports.
The maximum volumes mills could export to the European Union in CY’21 was 2.50 million tonnes (mn t). However, data maintained with SteelMint reveals the mills overshot this limit easily in the very first five months of CY’21 by almost 7% to 2.67 mn t!
Data further reveals, the official EU quota for Apr-Jun’21 was 5.65 lakh tonnes. However, the mills exhausted this quantum by May’21 itself. What’s more, the quota was exceeded by a huge 130% to 1.30 mn t!
Further, in the very first quarter of Jan-Mar’21, when, against the actual EU quota of 5.61 lakh tonnes, Indian flat steel exports overshot the same by a whopping 145% to 1.37 mn t!
Europe is perhaps the largest market for flat steels. In fact, actual HRC exports from India in Jan-Mar’21 were at 6.49 lakh tonnes against the quota amount of 2.13 lakh tonnes, up a huge 205%. In Apr-Jun’21, HRC exports went past the quota of 2.14 lakh tonnes by 115% to 4.61 lakh tonnes.
Another item exported heavily in the last five months was galvanised steel. In Q1 exports (5.6 lakh tonnes) exceeded quotas (1.98 lakh tonnes) by 184% and in Q2 by a mammoth 237% (exports at 6.71 lakh tonnes; quotas, 1.99 lakh tonnes).
Quantity in t
Source: SteelMint
Why did mills export in huge volumes to Europe?
First, the European market revealed a pent-up demand in the aftermath of a vaccination drive. The European Automobile Manufacturers’ Association forecast in Feb’21 that, after a year that saw the sharpest drop ever in EU car sales due to Covid-19, 2021 will see the same rising about 10% compared to 2020 — a sentiment that fuelled demand for flats.
Secondly, a few Europe-based mills were in problem, Liberty Steel being one that created a supply crunch in the domestic markets.
Thirdly, Europe’s domestic steel prices were high and so buyers wanted to capitalise on imports.
Price advantage
Indian mills jumped into the fray, reaping hefty margins around Apr-May’21. CRC export prices ruled at $1,400/tonne (t) at that juncture, which translated into about INR 100,000/t against the domestic trade-level prices of around INR 74,400/t in Apr and INR 81,000 in May. HRC export prices too hovered at $1,100/t against domestic prices of INR 62,400/t and INR 66,000/t in both months respectively.
In comparison, global prices ruled at about $950/t.
Outlook
Some say European buyers still want Indian HRCs since prices will come to around $1,000/t after duties paid, which would still be lower than domestic bases prices by Euro 80-195/t.
Another source says, “India exports will now attract additional 25% duty on the buyer’s account, which will not make imports from India viable at present.”
Or mills will have to lower prices by a significant 25% which they want to avoid.
“Indian mills are now wary of the dumping probe and would rather look for alternate markets like Middle East and Turkey,” says the source.
Prices as on 8:55 IST, 07 Jul. d-o-d changes indicated against closing price of 06 July
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