India: Bulk HRC exports hit 6-month low in May'24; mills focus on domestic market

Indian exports of hot-rolled coil (HRC) steel witnessed a significant drop in May 2024, according to bulk vessel line-up data compiled by BigMint (excluding container and road transport). HRC exports fell by a substantial 35%, reaching a total of only 217,876 tonnes (t) against 3,37,744 t in April 2024. This represents the lowest monthly export volume in six months, after reaching at 40,500 t levels in November 2023. Moreover, the same decreased sharply by 55% y-o-y against 480,365 t in May 2023.

Why HRC export volumes fell?

1. Limited HRC export allocations: Indian steel mills prioritised the domestic market over exports and had limited export allocations. In addition, realisations in the domestic market were higher compared to exports.

2. Maintenance shutdown: Planned maintenance shutdowns at Indian mills, particularly hot strip mills (HSMs), halted HRC export offers to South-east Asia and the Middle East (ME). These shutdowns, lasting around 15 days for some mills, were strategically timed to coincide with a period of low buying interest in both domestic and international markets.

3. Weak global market sentiments: A slowdown in global demand for steel also impacted Indian exports. The ongoing geopolitical issues in the Middle East, a key export destination, while buyers in the EU were cautious due to safeguard measures imposed by the European Union (EU), another major importer of Indian HRC, which dampened overall demand.

4. Competitive Chinese prices: Chinese prices remained competitive in the global market despite a slight increase in HRC prices. China's HRC export offers in May stood at around $542/t FOB against $ 537/t FOB in April. In the absence of strong competition from other exporters, China was able to raise prices while still attracting some business in the Middle East, according to sources. This price advantage likely made it more difficult for Indian exporters to compete effectively.

Outlook:

Indian mills have reemerged in Europe with export offers after over a month's pause. However, no firm deals were heard concluded as buyers are cautious due to the European Commission's new policy of 15% cap on residual hot-rolled flat (HRF) quota each quarter. Market sentiments in the ME region are expected to be slow due to Eid holidays in mid-June. Moreover, global market participants are awaiting Baosteel's price announcement.