Korea, China, Vietnam top India's steel import charts in CY'23. What lies ahead?

• Key exporters battle languishing home demand
  
  
• India's decent domestic demand encouraged imports
  
  
• Imports likely to taper off amid global price uptrend
  
  

Morning Brief: India's steel imports, which have been in the news lately, because of their ensuing impact on domestic steel sales, not only hit a seven-year high in 2023 (CY'23) but increased by over 45% y-o-y. BigMint's data shows that steel imports touched 7.18 million tonnes (mnt) in CY'23 against 4.94 mnt in CY'22.

Korea, China and Vietnam were countries that led the imports list last year.

Commodity-wise break-up

Finished flat steel imports were the highest, rising 38% y-o-y to more than 6 mnt (4.45 mnt in CY'22). Semi-finished imports rose manifold to 0.70 mnt (0.22 mnt), albeit on a low base, while finished longs showed a 28% increase to 0.34 mnt (0.26 mnt).

Country-wise break-up

South Korea has been the largest exporting country for Indian buyers, although volumes in 2023 rose a slight 2% to 2.46 mnt compared to 2.42 mnt in 2022.

China followed with 1.32 mnt (0.65 mnt), showing a y-o-y humongous rise of 103%.

Vietnam was also an aggressive exporter to India, its volumes rising a mammoth 1749% to nearly 1 mnt (0.05 mnt).

Japan was fourth with 0.91 mnt (0.69 mnt), recording a y-o-y increase of 33%.

Korea, Japan and Vietnam have been actively exporting steels to India by virtue of the various preferential trade agreements inked.

Reasons for high imports

High domestic demand within India: India showed healthy demand, especially towards the second half of the year. JPC data reveals, India's steel consumption rose 16% in 2023 compared to the previous year. Finished longs consumption was up 19% to 68 mnt (57 mnt) while flats were also up 12% to 55 mnt (49 mnt) y-o-y.

In the second half of the year, rains were sporadic and even deficient in certain regions, keeping procurements firm. The project segment did some decent buying. The government's strong infrastructure push escalated demand.

The second half of the year, especially in the post-rains period, saw healthy booking volumes. Demand for flats was good, especially from the PEB and fabrication segments.

A portion of this domestic demand was met through imports, essentially because of the cost viability factor.

China lures buyers with attractive offers: Challenged by dwindling steel demand at home, China became extremely aggressive in dumping its steel cheap across the world and India too was on its radar. End-buyers in India were lured especially by China's attractive prices. Landed prices into India from China averaged INR 54,150/t ($654/t) in rupee parity against trade-level domestic HRCs which averaged INR 57,400/t ($693/t) in this period.

China's exports rose to a seven-year high in 2023 to a huge 90 mnt.

Vietnam becomes aggressive exporter: Vietnam too became rather aggressive in exports, facilitated by the Asean-India Free Trade Area in which the former is a signatory. As per the General Department of Customs, in the first 10 months of 2023, Vietnam's iron and steel exports reached over 9 mnt, equivalent to $6.95 billion, up 31% in volume and 0.1% in value compared to the same period last year. The average export price in 10M2023 reached $760/t, down 23.4% over the same period last year.

By the end of October 2023, India was the fourth-largest export market for Vietnam with 8% share. Vietnam's steel exports were propelled by diminished domestic demand and a decline in consumption in Southeast Asia - which was traditionally its largest overseas market - making it aggressively scout for alternate geographies like the US, Europe and, of course, India.

South Korea exports rise amid higher supply: This East Asian country had reasons to increase its exports. One, it witnessed excess crude steel production in 2023, which rose 1.3% y-o-y. Two, its home demand and prices dropped as the real estate sector experienced a slowdown. Three, its mills, already saddled with excess material, grappled with rising raw material costs and a flood of cheaper steel imports. These factors colluded to make South Korea hunt for alternative markets and India was in focus.

Outlook

India's steel imports may slow down in the near-to-medium term as no fresh bookings have been noted from late last year. Moreover, the Indian government has gone slow in renewing its BIS certification for exporting countries.

Secondly, global prices have shown an uptrend which will deter Indian buyers from exploring imports as the price viability may be lost.