Indian steel majors are tapping the export market, primarily Europe, as supply shortage from Russia, Ukraine and China led to a jump in spot steel prices there. Indian steel majors, according to market sources, have seen at least 5 percentage point jump in exports to Europe which now stand at between 30 and 35 per cent of total production.
Spot price variation is close to ₹15,000 per tonne (between Europe and India) or around $2,000 per tonne, thereby making exports an attractive proposition.
Indian steel majors normally export close to 20-25 per cent of their production, with Europe being a major buyer. JSW, Tata Steel, Jindal Steel and Power Ltd (JSPL) and ArcelorMittal Nippon Steel (AMNS) continue to be the major exporters.
Around 81 per cent of the country’s steel production comes from private players while 19 per cent comes from PSUs.
According to data available with the Ministry of Steel, exports (of finished steel) rose 30 per cent y-o-y , to 12.29 million in the 11-month-period of FY22 (April-February). In the corresponding period last fiscal, finished steel exports stood at 9.5 million tonnes.
“Yes, exports are moving up and it accounts for around 35 per cent of our production, up from the 25-30 per cent levels during normal times. Considering some of the booking trends, exports could be up to around 40 per cent in April,” VR Sharma, Managing Director, JSPL, told BusinessLine.
JSW refused to comment on the matter.
According to Ranjan Dhar, CMO, AMNS, exports account for “approximately 10-15 per cent” of the company’s annual production of 7.5 million tonnes. The focus continues to be on catering to domestic demand.
“There has been some increase in prices primarily because of input cost rise like that of Australian coking coal. But, in terms of volume growth there has not been much jump for us. Moreover, there is good domestic demand that we are catering to,” he said.
European demand
Russia’s invasion of Ukraine has severely hit supplies in Europe. Both Russia and Ukraine were major suppliers, with close to 3-4 million tonnes of steel supplies per month from each of these countries. With the war, there is now a shortage of “at least 4-5 million tonnes per month”, which is being met through Indian and Chinese imports.
AMNS’s Dhar added that steel production in China has been lower on y-o-y basis impacting supplies, which has further accelerated the price situation in Europe.
Market sources say an impending lockdown in Tangshan in China — known as the steel city— has led to further volatility in prices. Global Times in a report mentioned that the largest steel-producing city in North China’s Hebei Province, had strict traffic controls and other curbs after new Covid-19 cases were reported there, resulting in many steelmakers and related businesses halting production and evaluating impact.
“Even if the war were to stop today, we do not see a situation where high prices of steel would come down in six to eight months. For one, Ukraine would look to rebuild itself and there are high chances of it becoming a net importer of steel; rather than being an exporter, at least for a period of time,”JSPL’sSharma explained.