Events and Updates

Title: Ukraine crisis, China supply constraints spur Indian steel exports

Posted on: 29th April 2022

Expected to cross 20 mt in FY22, better than around 19 mt the previous year
The Russia-Ukraine conflict and supply constraints from China have spurred the global demand for Indian steel exports, which are expected to hit an all-time high of over 20 million tonnes (mt) in FY22.

Trade sources add that Indian millers are likely to exceed FY19 export numbers of around 19 mt.

Steel companies are also tapping new markets such as Turkey and the UAE, while some southeast Asian markets like Indonesia and Phillipines are approaching Indian mills too. Russia exports around 9 mt steel to EU and Ukraine around 6 mt.

Strong demand
As per data from SteelMint, volume share of flat steel products was the highest at about 13 mt, up 23 per cent y-o-y. Exports of downstream products like hot rolled coils (HRCs) and plates, galvanised pipes and tubes and cold rolled coils (CRCs) were popular. Finished longs’ overseas sales rose 86 per cent to 2.43 mt; semis (billets) dropped 30 per cent to 5.05 mt (7.25 mt).

VR Sharma, Managing Director, Jindal Steel and Power Ltd (JSPL), said demand continues to be strong and will continue well into FY23. The company’s orderbook suggests at least 33-35 per cent of its sales in Q1 FY23 is likely to be export dominated. In FY22, its share of exports were up 33 per cent of sales (up from 25–30 per cent previously).

“Ukraine’s mills are badly hit and will need to be reconstructed; mill workers have relocated and the country will require steel to rebuild itself, too. Then, there are sanctions on Russia which can continue. Putting all this together, demand from Indian mills will continue,” he told BusinessLine.

Europe — the key buyer
Post-Covid reconstruction in Europe necessitated demand. There was also a shortage of natural gas, and high pricing saw shut down of several mills, albeit temporarily. This increased demand for CRCs – used in consumer goods and automobiles – from Indian mills.

SteelMint data show exports to Europe saw a 76 per cent jump in FY22 to 5.71 mt against 3.35 mt in FY21. European steel prices have been higher by $200 per tonne, compared to India.

New markets
Interestingly, China’s subdued exports activity caused by rebate withdrawals benefitted Indian mils. Flat products got access to new markets in West Asia that include Turkey and the UAE. These nations purchase Indian steel, and post value-add, sell them in Europe.

According to SteelMint data, Turkey’s imports from India skyrocketed from 48,000 tonnes in FY21 to 1.27 mt in FY22; and that of the UAE’s shot up from 0.99 mt to 1.34 mt in this period. LATAM, another market where Chinese players are focussed, could also be tapped.

“Indian mills exhausted their annual flat steel quota for CY21 (1.13 mt flat quota) in the first five months of last calendar, propelled by higher margins,” it said in a report.