India’s steel mills look at larger play in export markets after near three month lull

Indian steel mills which kept losing out on key export markets, apart from the European Union (EU) nations, are looking to resume supplies to the Middle East late-January onwards. 

Between April and November, finished steel exports to the key markets of Middle East continued to exhibit slowdown signs, with mills here losing out to lower priced competing offerings from China. 

The competition stiffened to an extent where Indian mills withdrew export offers apart from the EU. The lull began mid-September onwards when Indian mills were quoting $650 - 680 per tonne prices, against substantially lower Chinese offerings which were priced at “a max of $600 per tonne”. 

After a near three-month hiatus, export offers have been placed across the Middle East in the range $635-640 / tonne.

A recent transaction involving around 20,000 t was reportedly finalised at the same price range for deliveries scheduled from late January to early February, a report by consultancy major, BigMint (formerly SteelMint) says. 

Pressure Continues

According to an internal report of the Steel Ministry, accessed by businessline , exports to UAE dropped by 37 per cent y-o-y for April - November to 0.3 million tonnes (MT) versus 0.5 MT in the year-ago period. In terms of value, there was a 30 per cent drop at $ 297 million.

In the export market, Chinese steel offers stayed at $567 per tonne to $574 per tonne. 

Vietnamese buyers were reluctant to place orders above $575 per tonne netting back to around $565/ tonne, market participants said.

For April to November period, India’s steel exports dipped 6 per cent y-o-y to 4MT. The country is already a net importer of steel and trade deficit in the segment widened to ₹2400 crore (from ₹1600 crore in April – October).

EU saves the day

On the other hand, Indian mills continued to witness a rise in orders from most EU nations. The rise is driven by favourable positioning towards Indian offerings over China and a positive quota system.

Italy, the largest buyer for the eight month period under review, saw a 35 per cent y-o-y jump in shipments to 0.75 MT ; as against 0.55 MT.

Spain was another large buyer of Indian steel at 0.31 MT, up 70 per cent y-o-y. Shipments stood at 0.19 MT in the same period last year.

Orders from Belgium remained more or less stable at 0.33 MTlevels.

Slow pace of Recovery

Market sources say, in the EU north-west HRC prices held at the $ 764-765 per tonne range, as demand and potential capacity restarts at EU’s mills were a concern.

Italian steel mills are taking a traditional winter break in operations starting from the third week of December until second week of January on average.

“The dates of the stoppages vary depending on the mill, but on average they all will halt production for almost three weeks, which has become a new normal for the local steel-makers. Several years ago, mills were suspending their operations for two weeks as the longest to conduct maintenance works,”said sources referring to maintenance closures in EU’s mills.

Some recovery is expected to start at the beginning of Q1 2024 (January - March), though at a slow pace, market sources anticipate.

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