India’s steel exports to Europe hit a five-year high in FY24 with outbound shipments hovering at 3.3 million tonnes (mt), up 65 per cent y-o-y and near doubling over a five-year (from FY20). However, the cheer is short-lived. The country has ceded space in the UAE – where exports hit a five-year-low – and also in South East Asia, as per reports of the Steel Ministry, accessed by businessline.

Competition from Chinese exports have seriously dented Indian mills prospects in UAE and Vietnam.

Indian steel exports stood at 7.5 mt, up 11 per cent YoY, buoyed primarily by the rise in shipments to EU.

Exports there are dominated by three countries – Italy (1.7 mt), Belgium (0.85 mt) and Spain (0.7 mt) in FY24. Over the five-year, Italy saw exports increase by 112 per cent; exports to Belgium more than doubled from 0.4 mt; while in case of Spain there was a 133 per cent rise in shipments.

In FY23, exports to EU were at 2.0 mt level, while in FY22, it was at 3 mt. In FY21, when Covid-induced restrictions were being lifted globally, it was at 2 mt. In FY20, the Covid year, exports were 1.5 mt.

Market participants said, Indian steel mills have held back HRC export offers to Europe this week. Indicative prices are around $ 625 - 635/t.

“Supported by re-stocking and a weak dollar, domestic prices in EU rose after the Euro to US dollar exchange rate changed. Buyers also held off on overseas purchases due to long lead times. This ended the downward trend in European prices that had been in place since January. Despite limited demand, mills are expected to raise prices soon due to the lack of import competition,” consultancy firm, BigMint said in a recent report.

According to Ministry officials, sanctions on Russia and lesser competition from China were seen as reasons for Indian exporters to have tapped into European market.

Stainless steel demand across some pockets like Germany, France, Poland, Italy and Spain are also witnessing some improvement in demand.

Competition from China

However, Indian exporters lost market share in Vietnam and Middle East, to China. While price disparity was a key reason, geo-political issues too played a part in changing the trade dynamics.

For instance, in FY21 and previously, Indian exporters were tapping Turkey. But that has not been the case FY22 onwards. Among other West Asian nations, there is less demand from UAE too. In FY24, exports were 0.5 mt, down 30 per cent y-o-y (from 0.7 mt) and practically halved over this five year period.

Vietnam, among top five buyers of Indian steel till FY22, is now a key seller of steel. Till FY21, exports there averaged around 1.7 - 2.4 mt, making it the largest buyer.

“Chinese steel is being re-routed into India through Vietnam, while Indian exporters are unable to compete in these markets with China where the selling price of steel was less than their cost of production. It is a matter of worry,” a Ministry official said.

Indian mills inactive in export markets

Indian HRC export market remained inactive and mills withheld offers for Southeast Asia and the Middle East (ME) even in late April. The domestic market is being prioritised because of better demand.

“For the Middle East, imported HRC offers from China and Japan remain very competitive,” BigMint said in its report adding that lower offers from other origins has further discouraged Indian mills from exporting there.

Chinese HRC offers were around $ 575/t, while offers from Japan were around $580-590/t. In comparison, Indian mills had quoted around $ 595 – 600/t.

“Market demand in Southeast Asia remains weak while geo-political issues in ME persist,” the report added.

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