- Billets exports plunge the most on SE Asia silence
- Exports to EU resume, bringing Christmas cheer to mills
- Vietnam, Middle East buyers may remain quiet for some more time
Morning Brief: India’s steel exports over January-November, 2022 touched 9.90 million tonnes (mnt), a significant drop of 43% over 17.40 mnt seen in the corresponding period in 2021. In November, 2022, however, exports totalled 0.50 mnt, a m-o-m nearly 16% increase over October’s 0.43 mnt. Y-o-y, exports in November, 2022 plunged 56% against 1.14 mnt in the same month last year.
Commodity-wise exports trend
Over January-November, 2022, flats comprised 6.96 mnt, a drop of 33% against 10.36 mnt recorded in the same months in 2021.
Billets (semi-finished) plunged the most, by over 63% to 1.82 mnt compared to 4.98 mnt seen in the same period last calendar.
Finished longs registered a y-o-y drop of 48% to 1.08 mnt against 2.06 mnt in the same period last year.
Factors dragging down exports
1. Export duty impact: A key factor that drove down exports was, of course, the 15% export duty. The tax, which was in implementation for six months from 22 May, was revoked as suddenly as it was imposed, on 19 November. The duty impacted exports deeply even though mills tried to work around it by exporting boron-added hot rolled coils. However, that found few takers. Also, a substantial portion of the Middle East market was lost by Indian mills to China in this period.
2. Downtrend in global demand: The Russia-Ukraine war impacted global energy prices like never before, forcing end-users to cut down on consumption. As a result, demand globally down trended for an extended period, even as the world emerged battle-scarred from Covid. The EU did come out to do some panic-buying right after the onset of the war, but, once stocked up, removed to the sidelines, singed by energy prices. Thus, data shows that exports to the EU dropped almost 46% to 2.31 mnt in January-November this year against 4.25 mnt seen in the same period last year, when substantial volumes had been sent as post-Covid reconstruction had fuelled demand in the second half of 2021.
3. Vietnam loses import appetite: Vietnam, a traditional buyer of Indian steels, showed a lack of appetite. Exports to Vietnam dropped a sharp 36% to 1 mnt in these 11 months against 1.6 mnt seen in the same period in 2021. One reason was the decline in European demand which eroded Vietnam’s exports of value-added steel. Two, its end-users preferred competitively priced domestic material even as demand overall tapered towards the end of the year, because of intermittent Covid outbreaks. Thirdly, the pandemic led to slowdown in construction activities while domestic crude steel production rose. This forced Vietnam to turn exporter itself.
4. Longs demand drops: Globally, demand for billets and other longs is still depressed. Most of the Southeast Asian countries, which habitually imported billets, have been rather inactive for an extended period. Thus, India’s billets exports plunged the most, by over 63% to 1.82 mnt compared to 4.98 mnt in this same period last calendar. Around 80% of these are exported by the BF mills which are now saddled with excess inventory.
Outlook
In this season of cheer, India’s steel exports are expected to rebound, going forward, especially since Europe did return to buying ahead of the Christmas and New Year holidays. Also, China is easing Covid norms which will have a positive impact on demand and lift global sentiments. In acknowledgment of the positive signals, India’s HRC export index rose $25/t w-o-w on 13 December. Already 50,000-60,000 tonnes of HRCs have been booked to the EU and more may follow on the back of further enquiries although Vietnam and Middle East buyers may remain quiet for some time more.
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