India's steel exports fall by 6% y-o-y in CY'24. Will market trends reverse in CY'25?
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- Weak global macroeconomic environment weighs on exports
- Indian mills fail to compete with Chinese export prices
- Cloud of anti-dumping measures hangs over export market
Morning Brief: India's exports of steel, spanning products in the flats and longs segments, fell by 6% y-o-y in CY'24 to around 7.6 million tonnes (mnt) from over 8 mnt in the preceding calendar year, as per latest data with BigMint.
Finished flat steel exports, comprising over 82% of total exports, dropped around 6% y-o-y to 6.3 mnt from around 6.7 mnt in CY'23. Exports of semi-finished products such as billets and slabs stood roughly at 746,000 t compared with 858,000 t in CY'23. However, exports of finished longs remained largely flat at around 580,000 t.
Region-wise exports
The European Union (EU) remained the top destination for Indian steel exports, largely flat products, with total shipments inching up slightly y-o-y in CY'24.
Nepal, the US and the UAE were the other major export destinations, although total volumes showed a declining trend due to a plethora of domestic and global factors.
Export growth is critical in offsetting any domestic demand fluctuations, providing a buffer that enhances profitability for Indian steel companies. However, global headwinds spoilt the party for major Indian steelmakers in the year gone by.
Why steel exports edged down?
Stiff competition from China: The global steel market remained oversupplied in CY'24, with Chinese steel exports rising to a multi-year high of over 110 million tonnes (mnt). China's presence was overbearing in India's traditional export markets such as Vietnam. Indian suppliers found it difficult to compete with Chinese offers.
BigMint data shows that Chinese hot rolled coil (HRC) prices to Vietnam were lower by around $30/t compared with Indian prices in CNF terms in CY'23, which widened to over $60/t in CY'24. Overall, Indian HRC export prices were around $60/t higher than Chinese FOB prices in CY'24.
Chinese suppliers increased exports amid weak domestic demand especially due to a liquidity crisis affecting the construction and property markets. In terms of incentives and tax breaks, Chinese steel mills enjoy considerable government support and so are in a position to offer super competitive prices in the global market, edging out other suppliers in the process.
Anti-dumping probes weigh on exports: India utilised only 3% of its HRC quota for the October-December quarter for steel exports to the EU which were hit by weak demand and the EU's anti-dumping probe launched in August. The European Commission started registering all HRC imports from Egypt, India, Japan and Vietnam, paving the way for a potential retroactive application of anti-dumping duties.
India's quarterly HRC and strips export quotas to the EU for January-March and April-June 2025 are around 295,145t and 298,424t, respectively.
Vietnam launched anti-dumping investigations against HRC exports from China and India in August. Malaysia's trade ministry has also imposed provisional anti-dumping duties on flat-rolled steel products from India and other countries.
Weak demand in key markets: Exports to traditional destinations such as the UAE, Nepal and Turkiye edged down, thereby impacting total shipments. Turkish steel production increased in CY'24 and the expansion in Nepal's melting capacity resulted in lower imports of semis from India. Stiff competition from Chinese suppliers in the UAE and import duties on long steel products weighed on imports from India.
Outlook
Predatory pricing by Chinese suppliers, a slump in demand amid weak global macroeconomic indicators and anti-dumping probes are key factors weighing down exports. The World Steel Association (WSA) predicts Chinese domestic demand is likely to fall a further 1% in CY'25, if stimulus measures fail to take effect. Recent surveys have pointed out that Chinese steel exports may remain high in January-February.
On the other hand, possible implementation of a safeguard duty in India is likely to rein in steel imports and boost domestic prices. WSA forecasts domestic demand to grow at a CAGR of 8% in CY'25. Therefore, it is realistic to expect that Indian mills will largely focus on the domestic market going forward.
However, widely anticipated additional tariffs on Chinese exports may lead to a gradual shrinking of global steel supplies and slow recovery in prices, which might make exports more attractive for domestic companies than they currently are.