India's stainless steel exports rise 20% y-o-y in FY'24 --BigMint data

• Domestic production increases by 23% y-o-y driving exports
  
  
• Finished longs exports rise 8%, flats surge 40% y-o-y
  
  
• Export duty removal supported FY24 exports
  
  
• Imports of slabs up sharply, scrap volumes drop
  
  

Morning Brief: India's exports of finished stainless steel products increased by an impressive 20% y-o-y in the financial year 2023-2024 (FY'24) to reach 739,500 tonnes (t) as against 615,500 t in FY'23, as per data collated by BigMint. While shipments of finished flat products surged by 40% y-o-y to 321,342 t, exports of long products, in contrast, increased by a moderate 8% on the year to 418,166 t.

Why exports increased?

• Higher domestic production: The country's production of finished stainless steel reached 3.35 mnt in FY'24, an increase of 23% y-o-y. Production of finished flats accounted for 2.33 mnt, up 23% y-o-y, while finished longs output was assessed at 1.02 mnt in FY'24, an increase of 21% y-o-y. Higher domestic production volumes allowed for higher allocations for exports and thereby better realisations for mills.
  
  
• Export duty removal supported FY24 exports: In May 2022, the Indian government imposed a 15% export duty on stainless steel to control inflation and boost domestic supply. However, this move faced criticism from industry stakeholders, who argued it would harm exports and reduce profitability. Responding to these concerns, the government removed the export duty in November 2022 to enhance the competitiveness of Indian stainless steel products in the global market. This policy change led to a positive impact on export volumes and revenues.
  
  
• Sharp rise in shipments to Russia, S.Korea: Following sanctions imposed on Russia in 2022, stainless steel imports by the country were categorised as originating from 'friendly' and 'unfriendly' nations. European producers largely ceased exports, prompting reliance on other sources. In 2023, Russia's imports from 'friendly' countries comprised 97.1% of total volumes. India's exports to Russia were nearly 90,000 t in FY'24, a mammoth increase of 92% y-o-y, constituting 12% of India's total exports. Meanwhile, exports to South Korea and Germany increased by 179% and 32%, respectively. S. Korea accounted for 10% of total Indian exports in FY'24. Purchases from India increased as major Korean producers grappled with climate-related disruptions and their impact on production.
  
  

• Cost factor favours slab imports, scrap down marginally: Imports of stainless steel finished products dropped 10% y-o-y to 1.03 mnt in FY'24 from 1.14 mnt in FY'23,BigMint data show. Higher domestic production is likely to have led to lower demand for imports of finished products - flat products imports fell by 10% y-o-y. Notably, stainless steel scrap imports, increased marginally by 3% y-o-y despite 20% growth in steel production. Major stainless steel producers prioritise domestic scrap due to price volatility and trade disruptions in imports. Europe's high domestic prices in FY'24 reduced scrap supply for exports.However, the stability in scrap imports was offset by the sharp uptick in imports of cost-effective semis (slabs) from Indonesia by major domestic flat product manufacturers to the tune of 50,000 t per month, as per sources. This offered domestic mills a means of cost control to counter global commodity volatility, especially for scrap, nickel, and ferroalloys, and increase flats output with imported slabs for higher domestic consumption and exports. BigMint data show that domestic apparent consumption of stainless steel (production + imports - exports) in FY'24 increased around 12% y-o-y. However, higher domestic production was mainly channelled to the export market.