Depressed demand. Key steel export markets still under pressure because of global recessionary headwinds

Key export markets of Indian steel mills continue to see depressed demand during the April – February period of FY23.

The smaller markets, which exporters had tapped last year, performed even worse with steel mills holding back offers because of profitability concerns, indicating global recessionary pressures and slow recovery in demand from the after-effects of the duty that was levied by the Centre in May (subsequently withdrawn in November).

Steel exports halved (52 per cent) for 11 months of FY23 to 5.9 million tonnes (from 12.2 mt year-ago). The fall in key markets was between 30 and 47 per cent.

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Hot rolled coil/strip export fell 75 per cent and cold rolled coil sheet/strip fell 72.5 per cent, the Ministry report said. While alloyed steel export (which did not have the export duty levy) and stainless steel offerings grabbed 51 per cent of export basket, outstripping traditional non-alloyed flat steel offerings.

Slowdown in key markets

For Italy – the second largest export market for Indian mills – shipments dropped 30 per cent over last year to 0.8 mt. Previous year exports were 1.1 mt.

Belgium, another key European market, saw shipments drop 47 per cent YoY to 0.5 mt.

In West Asia, exports to UAE dropped 42 per cent YoY to 0.7 mt. Shipments in the year-ago-period were 1.13 mt. The second key market in the region, Turkey – which Indian mills had tapped last year- slipped from among the top five export nations, as per Steel Ministry data. Exports to Turkey, for the period under review, fell to just 0.36 mt from 0.8 mt last year, down 55 per cent YoY.

Turkey ceded space to Nepal as the fifth-largest export market for Indian mills. However, exports to the neighbouring country too saw a 36 per cent drop YoY to 0.5 mt.

Vietnam, which remained the largest export market– also witnessed a 47 per cent drop in export offers to 0.8 mt. Exports to the Asian nation was approximately 1.6 mt in the 11M FY22.

Small markets perform worse

“Apart from key markets, smaller markets that Indian mills had tapped previously have also seen lower demand. This, coupled with overhang of export duty, saw slower-than-expected off-take. However, with some improvement in export offers, price, and demand coming in over the last few weeks, we expect demand to go up March onwards. Exports will continue to be lower on a YoY basis as a whole,” an Indian exporter said.

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For instance, Egypt was a market Indian mills had tapped last year with shipments close to 279,000 tonnes. Exports dropped 82 per cent YoY to just 49,000 tonnes.

Bangladesh, which is in the midst of a foreign reserve crisis, saw shipments decline by nearly 53 per cent to 0.08 mt (from 0.162 mt). A similar trend was seen in shipments to Malaysia, down 38 per cent YoY.

Shipments to Germany were also down 50 per cent YoY.

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