Indian bulk HRC export shipments drop by 31% in Oct as mills cut allocations

India's bulk HRC export shipments declined by 31% in Oct '20 to 364,610 t in contrast with 531,641 t a month ago. This is the fourth consecutive monthly fall, according to the data maintained by SteelMint.

Factors that have led to a decline in export volumes-

• Mills reduce export allocations- In the recently announced investors' conference call Jindal Steel & Power is planning to cut down its steel exports to 20% share of total sales on the revival of domestic demand. During the lockdown, the company was exporting a 70-72% share of total sales.
  Meanwhile, JSW Steel also reported a decline in steel exports on a strong recovery in domestic demand. Share of exports stood at 28% in Q2 FY '21 compared to 57% to its total sales in Q1.
  
  
• Better realizations in the domestic market- Indian steel mills have significantly raised HRC prices by over INR 5,000/t and CRC prices by almost INR 10,000/t in the last three months. Also, recently, major Indian steel mills have announced a hike in their list prices by INR 1,000-1,250/t in HRC for Nov deliveries. Thus, higher profit margins in the domestic market resulted in limited trades in overseas markets.
  
  
• Robust demand in the auto sector compelled mills to reduce exports- Maruti Suzuki in its Q2 FY '21 financial results mentioned that the company sold a total of 393,130 vehicles during the quarter, higher by 16.2% compared to the same period the previous year. Sales in the domestic market stood at 370,619 units, higher by 18.6%.
  Amid the arrival of the festive-season Indian car and bike makers reported their best monthly sales growth in September. Passenger vehicle sales witnessed an increase of 26.45% and two-wheeler sales rose to 11.64%, according to data available with industry body Society of Indian Automobile Manufacturers (SIAM).
  
  
• Increased consumption in the domestic market- The domestic steel industry has started echoing the positive sentiments of the economy. As per the data released by the Joint Plant Committee, the finished steel consumption in Oct '20 was clocked at 8.65 mt, indicating an increase of 7.67% m-o-m.
  
  

Country-wise HRC export shipments- Bulk HRC export shipment volumes to China went down by 44% m-o-m to 87,677 t in Oct '20. On the other hand, exports to Vietnam increased steeply by 85% m-o-m to 185,531 t. Meanwhile, exports to the UAE stood at 38,896 (down 69% m-o-m) and Italy 25,200 (down 68% m-o-m) in Oct '20.

Port wise exports in Oct '20- In Oct '20, HRC export cargoes have witnessed an m-o-m decline at most of the major ports viz Dhamra at 66,396 t (down 11%), Hazira 42,500 t (down 59%), Paradip port at 66,345 t (down 59%) and Mormugao at 25,200 t (down 73%).

Outlook- Exports are likely to come down further in the month of Nov'20, considering domestic prices gains and lower export allocations.