India's steel exports rise 12% m-o-m to 9-month high in Jan'25. Will uptrend continue?

• Exports to EU surge 52% amid quarterly quota reset
  
  
• HRC exports drop 32% on competitive Chinese offers
  
  
• US steel tariffs may further squeeze India's exports
  
  

Morning Brief: India's steel exports (excluding stainless steel) climbed up by 12% to 634,061 tonnes (t) in January 2025 compared to 565,292 t in December 2024, according to provisional data maintained with BigMint. Volumes stood at a nine-month high, with similar levels last seen in April 2024.

The uptick was largely due to a 52% m-o-m increase in exports to the European Union (EU), which took in 41% of India's total shipments. However, this was moderated by a significant 32% m-o-m drop in hot-rolled coil (HRC) exports.

Commodity-wise break-up

Finished flats, which account for the lion's share of India's steel exports, recorded a 12% uptick to 484,937 t in January, the highest since April 2024. Parallelly, semi-finished (billet) exports increased by 12% to 109,365 t in January from 98,011 t in December, while finished longs volumes rose 14% to 39,759 t from 34,818 t.

Among flats, exports of HRCs and plates plunged by 32% m-o-m to 91,098 t in January, while those of pipes and tubes fell 14% to 125,000 t. All the other categories witnessed an uptrend - shipments of galvanised steel surged by 39% m-o-m to 155,603 t, while those of CRCs skyrocketed by 182% to 110,190 t, the highest since August 2021.

Factors driving India's steel exports in Jan'25

Exports to EU shoot up as quarterly quotas reset: The EU secured 261,753 t from India, a 52% increase from 171,818 t in December. The significant upswing in January is likely due to the beginning of a fresh quarter, when the EU's import quotas reset to zero. Traditionally, the EU sees higher import volumes during the beginning of the quarter, following which they taper off.

HRC exports to Middle East, EU hit by low demand: In recent times, HRC exports to major destinations such as the Middle East and EU have plummeted due to low demand. This has stemmed from aggressive sales by Chinese exporters, who have engaged in predatory pricing to offload the surplus steel not absorbed by the domestic market.

Notably, no Indian mill was actively offering to the Middle East market in early-January, as they were unable to match the competitive offers of China, which were at $485-490/t CFR UAE compared to Indian mills offers at around $535/t CFR UAE. In December too, Indian offers were $15-20/t higher than Chinese ones.

However, Indian mills resumed offering material by the month-end, as Chinese market participants remained absent for the Lunar New Year holidays.

Meanwhile, HRC export activity in the EU market has been largely lifeless, with demand for Indian material contracting due to sluggish market sentiments, the ongoing anti-dumping investigations, and prolonged lead times. Indian mills halted HRC offers to the EU in mid-November, and it is uncertain when activity will pick up.

New Year holidays freeze HRC trade momentum: The HRC market was relatively mum in the lead-up to the New Year, as well as following it, as participants took their time in returning to trades. This, too, impacted India's HRC exports.

Outlook

At the moment, there is a huge question mark over India's export activities.

In the near term, volumes may rise, as Indian mills had swiftly sealed a number of deals during the Lunar New Year holidays, when Chinese market participants were away from the market. Additionally, Ramadan is approaching, which generally prompts mills in the Middle East to accelerate restocking activity. Parallelly, in Europe, expectations are that momentum will pick up following the results of the EU's anti-dumping investigation, which will likely be announced in mid-March.

However, Trump's announcement of steep 25% tariffs on US steel and aluminium imports poses concern. While China's direct exposure to the US market is minimal, there is uncertainty over how the countries most affected - Canada, Mexico, and Brazil - will deal with the situation. China might further reduce prices to command a greater market share, due to which export volumes of India, as well as other countries, might free fall.