India: Billets export shipments fall further in Jan'22, however volumes to Eygpt rise

India, one of the leading exporters of steel billets, saw a fall in shipments for the fifth consecutive month in Jan'22. The volumes stood at 0.23 million tonnes (mnt) last month, a 8% m-o-m fall as against 0.25 mnt in Dec'21, as per customs data collated by SteelMint.

Egypt leading importer

Egypt emerged as the leading importer of steel billets from India at 0.05 mnt in January. The former's Ministry of Trade and Industry revoked the 16% safeguard duties on imports of billets in mid-Nov'21, which led to a rise in volumes.

Nepal acquired the second position among the top importers' list with 0.04 mnt in the month under review followed by Sri Lanka, Indonesia, Kenya, Tanzania with 0.03 mnt, each. However, Nepal's billets imports from India recorded a sharp fall of 43%, m-o-m last month. 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, going forward, sponge iron sourcing from Nepal producers will only increase. Consequently, billet demand from the country has decreased.

Indian mills were seen exploring new potential markets as lower ocean freights and ease in vessel availability encouraged mills for export allocations.

Factors weighing down Indian billets export bookings

• Bid-offer disparities: Higher bids for steel billets from the Indian domestic market as compared to those from the key importing nations like China and South East Asia kept export bookings low. Almost no firm bids for imported billets were heard from these countries.
  
  
• Price rally in the domestic market: Indian mills raised long steel prices significantly in Jan'22. The monthly average of SteelMint's BF-route rebar price assessment was recorded at INR 55,450/t exy-Mumbai, up by INR 370/t, m-o-m. Also, SteelMint's daily steel billets (IF-route) index was assessed at a monthly average of INR 45,450/t exw-Raipur in Jan'22. Thus, higher domestic finished long prices have kept mills' price expectations on the higher side even for the billet export bookings.
  
  
• Prevailing holidays: The global market remained slow during the Christmas and New Year holidays which affected trades.
  
  

Outlook

Indian primary mills have largely rolled over rebar prices for Feb'22 deliveries on supported demand in the domestic market. As a result, Indian primary steelmakers may not be interested in selling in the exports market at lower prices.