India: Steel billets export fall 14%, y-o-y, in CY'21

India, one of the leading exporters of steel billets, witnessed a fall in exports in CY'21. The volumes stood at 5.63 million tonnes (mn t) in the period under review, a 14% y-o-y fall as against 6.55 mn t in CY'20, as per customs data collated by SteelMint.

Notably, steel billets exports fell for the fourth consecutive month in Dec'21 to 0.25 mn t, a drop of 8% m-o-m compared to 0.27 mn t in Nov'21.

China leading importer but volumes fall sharply

China continued to be the largest importer of steel billets from India at 1.29 mn t in CY'21. However, the volumes dropped considerably by 58% on year as compared to 3.09 mn t in CY'20.

China's billets imports surged in CY'20 on strong demand as a result of the economic rebound since Mar-Apr'20, at a time when most other major economies around the world had been paralysed by the pandemic. The situation, however, changed dramatically in 2021. India's billets exports took a hit as a result of the rampant steel production curbs in China.

Nepal mills reduce billets bookings on high sponge demand

Nepal acquired the second position among the top importers' list with 1.04 mn t in CY'21 followed by Indonesia with 0.65 mn t. India's steel billets exports to Nepal fell marginally by 3% y-o-y.

Nepal has substantially increased sponge iron sourcing from India in recent years. Earlier this year, the Nepal government slashed customs tax and excise duty on imported sponge iron to zero for FY'22 from 5% earlier, citing the need to facilitate domestic manufacturing growth. This encouraged local induction furnace steel producers to import more sponge iron. Taking advantage of the duty removal, several steel producers in Nepal either came up with expansion plans or considered setting up their own induction furnaces to save production costs. Thus, sponge iron sourcing from India increased in recent times and billet demand from the country has naturally went down.

Rise in exports to Indonesia

Indian billets exports to Indonesia rose sharply by 55%, y-o-y. According to data released by SEAISI, the country's manufacturing sector grew 3.7% while the construction sector improved 3.8% in Q3CY'21, continuing the expansion of 4.4% in Q2CY'21, as the country did not close the construction sector, even during the pandemic.

Price trends

The yearly average of SteelMint's assessment of India billets export (150*150mm, 3SP/4SP) prices increased to $595/t FOB in CY'21 from $410/t FOB levels in CY'20.

Outlook

The Indian billets export market witnessed a fresh wave of optimism last week after remaining quiet for the past couple of weeks. Export bookings have picked up mainly on restocking demand ahead of the Chinese Lunar New Year holidays starting 1 Feb'22.