Indian bulk HRC export shipments drop over 30% on strong domestic demand

The nation's bulk HRC export shipments from India witnessed a monthly decline of 33% in Aug '20 to 762,395 t in contrast with 1,129,548 t a month ago, as per the data of twenty ports vessel line-up data maintained by SteelMint.

Factors behind the drop in export volumes-

1. Improved domestic demand- As the pandemic restriction started to easing post lockdown, the domestic demand improved as traders and stockists resumed buying. At the beginning of Aug '20, Indian steel mills lifted prices by around INR 2,000/t followed by the second hike of INR 500-1000/t and the third hike of INR 1,000/t on limited supply and restocking demand among traders. Thus, mills restricted exports and shifted interest to domestic markets.

Govt owned SAIL recorded a decline in its export volumes to 0.19 mn t in Aug '20 which was 0.31 mn t in the previous month.


2. Tight supply- Indian steel mills are facing supply shortage owing to increased volumes of HRC exports made in the last few months. Mills have few backlog orders for exports of Aug shipments which they have deferred to cater to domestic demand. Meanwhile improved buying activities in the domestic market lead to a supply-demand mismatch.

3. Indian auto demand likely to rebound- The Indian automobile sector has witnessed strong sentiments from rural and semi-urban markets and a rise in preference for personal mobility on the back of gradual normalization in the supply chain. Maruti Suzuki (MSIL), has reported 17.1% (y-o-y) growth in its Aug sales and is ramping up its supply chain to build inventory at dealerships as it expects demand to sustain and get stronger as the festive season approaches.

Export shipments to China remain stable- Bulk HRC export shipment volumes to China remained largely stable at 475,867 t in Aug '20. Export volumes to Vietnam went down by a whopping 64% m-o-m to 142,547 t in contrast with 392,509 t. However, export volumes increased by 27% to UAE in Aug '20 at 39,500 t in comparison with 31,100 t a month back.


Port wise exports in Aug '20- In Aug '20, HRC export cargoes have witnessed an m-o-m decline at most of the major ports viz Dhamra at 156,755 t (13% down), Paradip 127,654 t (down 22%), Hazira 147,000 (30% down) and Mormugao at 73,750 t (down 65%).

Outlook- Few mills are likely to undergo maintenance shutdown which may keep supplies tight in the near term. Also, India will enter the demand season at the end of the monsoon which will keep the HRC prices supported in the domestic market. Thus, in Sep, export volumes are likely to shrink on improved domestic demand.