With the world’s top steel producer China imposing export tariffs on ferrochrome and pig iron from August 1, besides removing export tax rebates for 23 steel products, experts are upbeat about demand for India’s steel exports for the current financial year.
China’s move has paved the way for India to enter into new the global markets where the former has dominant market share. According to experts, because of the decarbonisation drive in China and the protectionism measures being undertaken by several countries, there has been a growth of 9.2 per cent during April-July on an year-on-year basis.
New opportunity
Traditionally India has been exporting the majority of its steel to countries such as Nepal, the UAE, Italy, the US, and Belgium. However, significant quantities have been exported to Vietnam and China since FY20, as per the Indian Steel Association.
According to VR Sharma, Managing Director of Jindal Steel Private Ltd, India has an opportunity to export to the entire Southeast Asia, Europe and Middle East.
“In our view, steel in particular has become more localised with various protectionist measures enacted by several countries. Besides, the high price of steel has prompted Russia and China to adopt measures deterring exports. We believe this has opened up the market for Indian players who have been increasing their export allocation at much higher margins,” Edelweiss said.
It further added that tough environmental compliance measures for existing capacities and deterrence to set up new capacity will help maintain the market balance.
JPC data
“The outlook for steel exports will remain positive for FY22. As per the Joint Plant Committee (JPC) data for the period April-July, 2021 the finished steel exports have reached 5.06 million tonnes (mt) as compared to 4.64 mt for the corresponding period last year, registering growth of 9.2 per cent,” the Indian Steel Association said.
“We are exporting 35-40 per cent of the total produce since the last one-and-a-half years. It was less than 15 per cent one-and-a-half years ago. So there is a growth of around 20-25 per cent in the export segment,” Sharma of JSPL told BusinessLine .
Domestic demand
As per the Indian Steel Association, during the CY20, the demand for steel declined to 89.3 mt from 102.6 mt in CY19, registering a negative growth of -12.9 per cent.
Based on the projections, the demand is expected to recover to 104.3 mt in CY21 and to 111.4 mt in CY22. Meanwhile, JSPL Head said the domestic demand is good but the demand for rebar construction steel is little less.
“Most of the construction workers who migrated to their homes have not gone back to their sites. The moment they complete their full vaccination, they will be back to their work. So, by the end of this month, we are expecting an uptake in demand,” Sharma added.
“In our view, tepid domestic demand has resulted in domestic players increasingly eyeing export markets. Exports volume has steadily increased to (12-month high level) to 2.42 mt in July. In comparison, Far East prices at $1,005/t and China’s export price at $975/t stayed relatively stable,” Edelweiss said.