New Delhi, September 26:

A Steel Ministry report has pointed out to continuing “southbound steel prices” in global markets and recessionary pressures in Europe’s housing market, thereby raising concerns about continued pressure on exports (steel).

In Europe, the construction sector, particularly the residential sub-segment, is experiencing a slowdown and “is likely to enter recession this year, which affected the sentiment”.

Concerns about oversupply are pressuring finished steel prices in the USA amid weakened buying in a typically slow part of the year, the report, accessed by businessline said.

The report states that while in China, prices showed a marginal improvement in August compared to the previous month; weak property sector continues to impact construction-related manufacturing and steel demand there. Output cuts did lead to temporary rally in steel prices, but these were short-lived.

Price in India, “eased significantly” in August; and the reason was pegged on “geo-political issues” and seasonality - monsoons being a lean period for commodity demand. Indian mills

Incidentally, India’s steel majors increased prices by 2 – 8 per cent across categories like hot-rolled coils and rebars (used mostly in construction sector), and cold rolled coils beginning September in what is being seen as the first major price hike that was initiated since April.

Flattish Exports

For April - August, India’s steel exports was near flat (rising at over 1 per cent) at 3.01 million tonnes (mt).

European nations were the highest buyer of Indian steel accounting forover 40 per cent of the exports for the period under review. Italy was the largest buyer of Indian steel, at 0.67 mt, up 34 per cent YoY, followed by Spain with 0.27 mt, up 105 per cent YoY, while Belgium saw a 12 per cent decline in purchases to 0.27 mt.

Netherlands, Poland and Portugal are the other big European buyers, the government report stated.

The big Asian export markets for Indian steel mills were Nepal – which bought 0.25 mt witnessing a YoY rise of 23 per cent; and UAE – where shipments dropped by 33 per cent YoY to 0.2 mt.

Vietnam, one of the largest buyers of Indian steel, is now one of the top five importers (selling to India). Exports (to Vietnam) was less than 0.1 mt.

“Volume wise, hot rolled coil or strips (1.162 mt) was the item most exported (accounting for 38 per cent share in total finished steel) while Italy (0.667 mt) was the largest export market for India,” the report mentioned.

It also said, while import of finished steel was valued at Rs 23,651 crore ($2873 million) whereas export was valued at Rs 25,735 crore ($3126 million). Thus, overall trade surplus was Rs 2,084 crore,” it further added.