India: Finished steel exports rise 25%, y-o-y, in FY'22

India's finished steel exports reached 13.494 million tonnes (mnt) in FY'22, up sharply by 25% as against 10.784 mnt in the previous fiscal, as per provisional data by the Joint Plant Committee (JPC) under the Ministry of Steel.

Why exports increased?

• China factor: The Chinese government removed the 13% export rebate on 146 items in May'21, followed by another move in Aug'21 that saw rebates removed from a further 23 items, including CRC, galvanised iron and silicon steel. The authorities had taken this move to discourage steel exports and further reduce excess production capacity in order to achieve carbon peak by CY'30.
  
  
• 15% Russian export duty: The Russian government imposed a 15% export duty, a minimum of $54/t on all steel products from Aug-Dec'21. This translated into $115/t for HR products and rebar and $133/t for CR products. Notably, Russia is world's third-largest steel exporter. This export disincentive created opportunities for Indian mills.
  
  
• Russia's invasion of Ukraine: The supply gap created by Russia's invasion of Ukraine benefitted Indian steel producers signifantly as Russia and Ukraine control almost 45 mnt or 10% of the global seaborne steel trade, and the largest importer of Russian steel is the European Union. During February and March, Indian steel mills diverted their exports mainly to Europe at lucrative prices, thereby exhausting their Q1CY'22 quotas.
  
  

In March, steel exports stood at 1.195 mnt, up 3% as against 1.157 mnt a month ago. In contrast, on a y-o-y basis, the same dropped by 8% against 1.292 mnt in Mar'21.

Crude steel production rises 16% y-o-y in FY'22

Indian mills produced 120.107 mnt of crude steel in FY'22, up 16% against 103.545 mnt in the last financial year. In Mar'22, production volumes rose 10% to 11.046 mnt in comparison with 10.055 mnt a month ago. Also, the same moved up 5% y-o-y against 10.480 mnt in mar'21.

Additional capacities commissioned by the primary mills was the primary factor behind this increament in production. For instance, in second half of FY'22, steel giant JSW Steel commissioned its 5 mnt/year brownfield expansion and Tata Steel acquried Neelachal Ispat Nigam Limited (NINL) through it has increased its long steel making capacity.

In addition, the major mills have ramped their capacity utilisation; for instance, JSW's capacity utilisation rate stood at 94% in Q3FY'22, up 3% as against 91% in Q2FY'22.

Finished steel production grows 18% in FY'22

India's finished steel production sat at 113.254 mnt in FY'22, up 18% as against 96.208 mnt in FY'21. Production volumes rose on the back of increased downstream demand supported by robust export orders during the year under review. Steel production rose by 18% to 10.744 mnt in Mar'22. Also, the same grew 5% versus 10.105 mnt in Mar'21.