Exports Prices Have Hit Rock Bottom, Won't Dip Further: SAIL Chairman

Navratna PSU Steel Authority of India Limited's (SAIL) efforts at expanding its market portfolio resulted in 1.18 MnT of exports in FY20 - a record 54% rise year-on-year. Total exports in 2018-19 were recorded at 736,000 tonnes. The steel behemoth is looking to tap into the exports market in a big way at a time when the pandemic-induced lockdown has squeezed domestic demand for steel.

Seaborne Sales Surge

Exports of semis including billets and blooms as well as pig iron and iron shots have boomed, thanks to healthy overseas demand, particularly from China, and rising inventories of the primary producers amid insignificant downstream demand.

"We exported a healthy quantity of mainly semis in April and are looking for robust seaborne sales in May too," says Anil Chaudhary, Chairman, SAIL. Commenting on export prices, he observes: "Prices have plummeted 15-16% over a period of time and are still quite volatile. If one billet consignment fetches, say, USD 350 per tonne today, the price could slide 5-7% within 1-2 weeks. But there is consistent demand," he says.

China Imports Soar

"When Covid-19 struck all of us thought China was sitting on a lot of inventory and would resort to steel dumping. However, since manufacturing started slowly resuming in China, the country has put a lot of additional demand in the market as is borne out by India's spiralling semis exports to that country. SAIL has concluded bookings of around 300,000 tonnes already and most of it is for China," says Chaudhary.

"Not only China, Indian exports are reaching Vietnam, Philippines and the MENA region. We have seen aggressive buying by some Middle-Eastern countries. But semis prices will remain under pressure due to oversupply in the export market by Indian integrated producers," Chaudhary informs.

Prices Have Hit Rick Bottom

HRC export prices are in the range of USD410 per tonne on a CFR basis and billets are in the range of USD 350/MT. There is demand for iron shots and pig iron; the price of the latter is around USD 300/MT.

"Prices gave hit rock bottom and can't go down further," contends Chaudhary. "Once domestic demand picks up we might not be ready to export at these low prices. In May total exports by SAIL are likely to touch 200,000 tonnes and the figure could go up in June if domestic demand remains dull. Usually SAIL would be earmarking 8-10% of total production as annual exports," says Chaudhary.

He expressed optimism that once the lockdown is lifted in Nepal India's steel exports would soar. "The eastern ports of Paradip, Visakhapatnam and Dhamra are having to handle a lot of cargo which is not in the finished form but in semis. This is a big constraint for Indian exporters," he points out.

~By Nirmalya Deb