India's steel exports hit 20-month high in Jan'24; EU restocking boosts volumes

• Indian mills exhaust Q1 EU quotas amid rising prices
  
  
• Vietnam, ME volumes fall on lower Chinese offers
  
  
• Q2 outlook on EU market remains bullish
  
  

Morning Brief: India's steel exports hit a one-and-a-half year high in January, 2024. Data maintained with BigMint reveals that the volumes touched 1.11 million tonnes (mnt) last month. Similar levels were last seen in May 2022.

Volumes over the first 10 months (April-January) of the current fiscal of 2023-24 (FY'24), however, showed a marginal 2% dip to 6.91 mnt against 7.07 mnt in the same period in FY'23.

Commodity-wise break-up

Commodity wise, flat steel exports mainly drove up the volumes, especially hot rolled coils (HRCs) and galvanised.

On a y-o-y basis, finished flat steels, which had a whopping 90% share in India's steel exports in January, showed a 39% m-o-m increase to 1 mnt against 0.72 mnt in December 2023. In flats, the share of HRCs was the highest at 49% or 0.55 mnt. Galvanised had the second-highest share of 25% at 0.29 mnt.

Semi-finished (billets) exports, with a mere 4% share in the exports basket last month, fell 29% y-o-y to 46,700 tonnes (t) (65,990 t in December 2023) while finished longs which enjoyed 5.5% in the exports pie, rose 40% to 61,700 t (43,900 t).

Factors that influenced steel exports in Jan'24

High EU domestic prices support Indian HRC offers: Good restocking demand from the European Union (EU) prevailed, allowing exports here to contribute a leading 67% of the 1.11 mnt in January. M-o-m, exports to the EU were up a sizeable 47% in January to 0.73 mnt compared to 0.50 mnt in December, 2023.

Demand was decent due to domestic shortage in this geography, and a hike in HRC prices. One particular domestic offer was heard at EUR 780/t ($839/t), even after HRC prices in the EU decreased slightly on 13 February. Indian suppliers, on the other hand, were offering into southern Europe at around $695-700/t CFR in Nov-Dec'23 compared to $685-690/t CFR in Oct'23. Similar offers were seen from Taiwan, but there are no buyers in Europe at the moment as they are well-stocked.

As per reports, exports to the EU were also inflated due to the fact that Q1 (January-March, 2024) quotas have been exhausted by the Indian mills. Thus, the current Indian offers can be considered for Q2 (April-June) deliveries.

Supportive global prices: Global prices were also upwardly mobile in January, which helped to keep Indian offers supported. For instance, Chinese benchmark HRC export offers rose sizeably to $575-574/t levels FOB over December 2023 and January 2024 respectively compared to $532/t in October and $559/t in November 2023. China's Baosteel, the world's top steelmaker, increased HRC and thick plate prices for January sales by RMB 200/t ($28/t) m-o-m. Japanese export offers rose by $35/t FOB in January to $610/t. Thus, Indian mills were encouraged to reopen their export offers after a three-month silence at a much higher $601/t FOB in January compared to $580/t in September. The higher realisations made exports attractive.

Vietnam prefers Chinese material: Vietnam, once a key market which saw volumes even crossing 0.20 mnt in some months in 2021, is today hardly anything to write home about. But volumes in January 2024 rose 67% to 58,500 t against 35,000 t in the preceding month. Average Chinese offers to Vietnam in January hovered at $609/t CFR - slightly lower by $12/t compared to the Indians' $621/t quotes. Indian mills resumed offers to Vietnam in early January, after a gap of almost a year.

UAE buyers lured by cheaper Chinese offers: Exports to the UAE fell 43% to around 38,000 t in January 2024 compared to 67,000 t in December 2023. UAE buyers remained more active in booking competitively prices Chinese cargoes. For instance, January offers to the UAE market from Indian mills hovered at around $635-640/t CFR whereas the Chinese quotes were much lower at $610-615/t CFR UAE.

Outlook

Overall, steel exports may remain largely range-bound or fall slightly in the near term because of the global trade lull induced by the Chinese Lunar holidays and Tet festival in Vietnam.

Global steel prices started easing somewhat from February. However, domestic EU prices held more or less firm. Thus, Indian mills' chances of serving the EU market in the near-to-medium term remains quite strong considering that Turkiye is less competitive at present due to its own challenges, and other suppliers like South Korea are not widely offering volumes.