Global pig iron imports fall 7% in CY'23. What lies ahead?

• Sanctions hit volumes of leading importers US
  
  
• Key exporting countries focus on domestic sales
  
  
• Geo-political trends to shape future demand trend
  
  

Morning Brief: Global pig iron imports fell by around 7% y-o-y in calendar 2023 (CY'23), reveals data maintained with BigMint. Total imports by the top 15 countries dropped to 9.45 million tonnes (mnt) last year against over 10 mnt seen in 2022.

The United States was the highest importer with 4.35 mnt, which was a 5% drop against 4.58 mnt in 2022. Italy, ranked second, showed a 16% increase but its volumes are far lower at 1.60 mnt (1.38 mnt in 2022). Among the rest of the top five importers, Turkiye showed a nominal 3% increase to 1.39 mnt (1.36 mnt) while Taiwan's volumes rose 43% but on a low base of 0.43 mnt (0.30 mnt). China, at fifth place, recorded a steep 64% decline to 0.39 mnt (1.08 mnt).

Reasons for fall in import volumes

Drop in imports into US: Imports into the US, the leading importer, fell y-o-y from 4.58 mnt in 2022 to 4.35 mnt in 2023 owing to sanctions on Russia. Imports from Russia fell from 0.6 mnt in 2022 to nearly nil in 2023. However, imports from Brazil rose from 2.34 mnt in 2022 to 2.8 mnt in 2023 but this was not enough to make up for the gap created by the lack of Russian imports.

Drop in imports into China: A highly weakened real estate sector and a rise in China's domestic pig iron production in the face of subdued demand led to lesser y-o-y imports in 2023. Domestic pig iron production rose around 1% y-o-y to 871 mnt in CY'23. China's real estate sector has been experiencing negative growth for almost two years now.

Turkiye: Imports into Turkiye were largely stable although inflation and high interest rates impacted steel production and consumption. The country's annual inflation in 2023 was at a steep 64.8%, the highest since November 2022. Inflation was spearheaded by food, logistics, housing and utilities. The lira eroded by 35% to the dollar last year, denting purchasing power.

Fall in exports from key countries

Ukraine: In 2023, Ukrainian steel mills reduced pig iron exports by 5.8% compared to 2022, to 1.25 mnt. Last year, Ukrainian steelmakers continued to operate amid limited logistics capabilities and unfavourable global market conditions. The main pig iron producers in Ukraine - Metinvest Group companies (Kametstal and Zaporizhstal) and ArcelorMittal Kryvyi Rih - operated at capacity utilization rates of 65-75% and 20-30%, respectively, last year.

India: Exports from India fell from 0.57 mnt in 2022 to 0.3 mnt in 2023. The US, Italy, Turkiye, and Bangladesh were key importers. However, nil volumes went to China amid the latter's weak market demand. Higher domestic pig iron prices also kept Indian pig iron export offers on hold for the major part of the year in CY'23.

Global pig iron market overview

Global pig iron production in 2023 increased by mere 1.1% y-o-y to 1.41 billion tonnes.

As per a market source, the pig iron market size was valued at $9.70 billion in 2023 and the total pig iron market revenue is expected to grow at a CAGR of around 8% from 2024 to 2030, to touch nearly $16.41 billion.

Outlook

However, much depends on global factors which have far-reaching ramifications on end-user segments of pig iron - namely infrastructure, construction and automotive. Because of the growing urbanisation trends in India and BRICS countries, demand prospects are good in these regions.

However, geo-political factors, which impact energy pricing and currency trends, can exert pressure on demand in other geographies challenged by these factors. China's economic well-being too will shape future demand contours.

Innovation is also key. Certain companies, including Tata Steel in India, are pioneering newer pig iron grades for specialised applications which will benefit the industry in future.