India's steel exports rise for 2nd consecutive month in Sep'24. What factors boosted volumes?
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- Rising prices encourage mills to resume ME offers
- Indian steel mills yet to exhaust 20% of EU quotas
- Fluctuating Chinese prices a bother in short term
Morning Brief: India's steel exports rose a considerable 26% on a provisional basis, in September 2024 to 0.58 million tonnes (mnt) against 0.46 mnt in August. It may be mentioned August and September recorded back-to-back growth after a five-month fall spanning March-July, 2024.
On a y-o-y basis, September exports were up a more nominal 8% compared to 0.54 mnt in September 2023.
Volumes provisionally fell 32% m-o-m in April-September 2024 (or H1FY'25) to around 2.9 mnt against 4.30 mnt seen in the same period last fiscal.
Country-wise break-up
The EU continues to be India's leading destination at 0.29 mnt, doubling from 0.14 mnt in August. Volumes to Vietnam plunged to a mere 674 t but the Middle East saved the day, trebling to nearly 50,500 t.
Nepal offered steady support although volumes fell 11% m-o-m to nearly 66,499 t from nearly 75,000 t in the preceding month.
Factors that impacted exports in Sep'25
Rise in global steel prices: The increase in export volumes m-o-m was essentially propelled by Indian mills' resumption in offers to the Middle East in September and October, 2024. Indian mills became active because of the rise in global steel prices. China's Baosteel, the largest steel producer globally, increased HRC prices by RMB 500/t ($71/t) and hot-dip galvanised by RMB 550/t ($78/t) m-o-m for November 2024 sales. The hike was a knee-jerk reaction to the stimulus measures unveiled by the Chinese government, which also gave a fillip to HRC futures on the Shanghai Futures Exchange.
Vietnam's Hoa Phat followed by raising HRC prices by $35/t and Formosa Ha Tinh, by around $35/t CIF, both m-o-m and for December sales. Prices rose amid increased offers from domestic competitors and a hike in imported HRC offers from China ahead of the Chinese National Day holidays (1-7 October).
Encouraged by the above trend, some Indian steel mills resumed HRC (SAE1006) export offers to the Middle East after a five-month pause, with quotes at $530-540/t CFR UAE. A deal of around 10,000 t was heard concluded at $530/t CFR UAE for November shipment. As a result, volumes to the UAE more than trebled to almost 50,500 tonnes in September from around 16,000 t in August.
Europe volumes surge, mills yet to fulfil quotas: HRC export volumes to Europe surged 97% to 0.29 mnt in September from 0.15 mnt in August. India has so far fulfilled 80% of its allocated quota of 301,704 tonnes to Europe with the balance 20% still remaining in hand. Thus, it is comfortably placed where Europe is concerned, especially since competing countries like Egypt, Vietnam, Japan and Taiwan have exhausted and exceeded their quotas to the EU. Only Turkiye is a spot of bother since it has not yet fully exhausted its quota to the EU.
Exports to Turkiye receive major setback: Indian steel exports to Turkiye have been dwindling since the last one year. Recently, exports suffered a major setback with Turkiye imposing anti-dumping duties on imports of HRCs originating from China, India, Japan, and Russia. Imports from Russia, India, and Japan face tariffs of 6-9% of the CIF value, and are aimed at protecting Turkish domestic producers from unfair competition of cheap imports, Turkiye said. The decision follows an anti-dumping investigation initiated in October 2023, which found that steel from these countries were being sold at dumping prices, threatening Turkiye's local steel production.
Outlook
In the short-term, optimism is tinged with caution as Chinese prices have been fluctuating and the initial euphoria over the stimulus measures is wearing off. EU steel mills are attempting to increase prices but there is a question mark whether these levels will find acceptance amongst buyers.
Additionally, a spate of anti-dumping probes from the EU, Vietnam and Malaysia may keep Indian exports under pressure, going forward.