India: Feb steel exports hit 8-month high; but FY'23 volumes seen dropping sharply

• Feb exports rise 15% m-o-m, EU demand pulls up overall volumes
  
  
• HRCs up 36% but billets drop m-o-m
  
  
• FY23 steel exports expected to decline 45%
  
  

Morning Brief: India's steel exports stood at 0.78 million tonnes (mnt) in February 2023, up 15% against 0.68 mnt in January 2023, as per SteelMint's data.

February volumes were also noted to be at an 8-month high although these fell 41% on a y-o-y basis compared to 1.32 mnt recorded in

February 2022.
Cumulative volumes over January-February, 2023 amounted to 1.45 mnt, down 40% against 2.41 mnt seen in the same period last calendar.

Commodity-wise break-up

Flats: The data also reveals that m-o-m HRC exports increased 36% to 0.35 mnt in February (against 0.26 mnt in January). Galvanised exports too rose 33% m-o-m to 0.19 mnt (0.14 mt). Total flats exports were up 19% m-o-m to 0.69 mnt (0.58 mnt).

Longs: However, billets (semis) exports dropped 15% in February to around 45,000 tonnes (t) against 52,400 t in January. Longs rose a nominal 7% to nearly 47,000 t in the month under review (44,000 t).

Region-wise break-up
Exports to the European Union (EU) increased 34% m-o-m last month to 0.39 mnt (0.29 mnt). Volumes rose because this geography staged a comeback of sorts from the beginning of the calendar.

Vietnam showed a marked 48% drop m-o-m at barely 31,000 t (60,000 t) while volumes to the UAE remained stable at around 77,000 t.

Turkey showed a comeback with 32,000 t (29,000).

Factors helping steel exports to recoup

1. Post-duty removal rebound: India's steel exports have shown signs of a rebound m-o-m from December, 2022 with the removal of the 15% export duty in November last year. Volumes, which had averaged 1.20 mnt over January-May 2022, had received a setback from June 2022 , averaging 0.56 mnt from June-December, 2022. But January-February denote a more positive average of 0.73 mnt.

2. EU buyers return: The mills were waiting for the return of buyers from the European Union since margins are higher here. But, even if they did return from January, demand fell short of market expectations. Deals were initially sporadic and of modest volumes. But, February bookings were decent and lent muscle to last month's total export volumes, at 0.39 mnt, the highest amongst the importing regions.

3. UAE remains stable: Export sales to the UAE remained stable as this region continues to emerge as a key destination for Indian mills. But perhaps volumes did not rise because Indian mills decided to pick and choose their markets, focusing mainly on the more lucrative ones, like the EU. UAE buyers, it was learnt, having access to cheaper alternate sources, were negotiating for lower offers - which did not excite Indian mills - a scenario that kept volumes flat.

Outlook
Flat steel exports are likely to remain supported by EU and Middle East demand.

Vietnam, a traditional buyer and a predominantly HRC market, seems to be a spot of bother though. Plagued by low domestic demand, it has preferred domestic or cheaper Chinese material.

Billet export volumes may regain some momentum on global price recovery and Turkiye's enquiries.

However, total Indian steel exports are expected to fall by around 45% in financial year 2022-23 (FY23) mainly due to the impact of the export tax imposed in May 2022.