China has for the first time emerged as the largest seller of steel to India, toppling key markets like Korea and Japan for H1FY24, with nearly 918,000 tonnes coming in, data from India’s steel ministry accessed by businessline shows. Moreover, Vietnam, a key export market for Indian mills, is now amongst the top-seller or importer to Indian trade.
Lower priced Chinese offerings - which are being sold directly & also offloaded via Vietnamese traders - are being seen as the main reason for this shift in trade dynamics, say Ministry officials and market sources. At the same time, export markets remain depressed, with the European Union being a saving grace – Belgium, Spain and Italy accounting for 35 per cent of the exports - despite price pressures and slowing orders.
As per the Steel Ministry report, China displaced Korea (917,000 tonnes) and Japan (427,000 tonnes) from the top two slots, while Vietnam (191,000 tonnes) displaced Taiwan (78,000 tonnes), for the first half of the fiscal. The change came about as Chinese imports zoomed by 55 per cent YoY, while Vietnamese offerings shot up by a whopping 485 per cent. Korea saw a dip in imports by 16 per cent respectively.
Apart from pushing cold rolled coils, China reaped benefits of pushing lower priced offerings targeting the trade which include galvanised coils and sheets, plates, pipes, among others. In the cold rolled coil segment it displaced both Korea and Japan - traditional big ticket sellers.
“Imports into India are rising and hence remains an area which we need to watch out for. Exports have also moderated....” Jayant Acharya, Joint MD and CEO, JSW Steel, the country’s largest steel maker by volume, said during an analyst call.
Consultancy firm, SteelMint in a report mentioned that South Asia (under which India is a part) saw a 40 per cent increase in Chinese imports for Jan – Sept period (nine month period).
Price Movement for Import
According to Acharya, in case of the lower priced imports which are coming to India “there may be a differential number”; but that is primarily because there is an attempt to offload “excess stock”.
“It is probably a little bit more of the trade flows, which are holding stocks and getting out of those stocks,” he said adding that: “If somebody were to convert with the current raw material, then the prices at which some of those imports of the lower price have come in are not sustainable. So, therefore I don’t see that as really a continuation going forward, I think the prices will reflect a higher raw material cost going forward. With that, the gap in steel prices in India will not really look that high.”
Incidentally, the price report of the Steel Ministry reveal that despite a 55 per cent plus rise in volumes from China, the price movement (upwards) was just 18 per cent, or $1,075 million worth of finished steel came in H1FY24 (vs $911 million in H1FY23). In fact, despite a 13 per cent YoY increase in import volumes to three million tonnes (mt) for these six months (April - Sept), prices at which the shipments came in fell by 14 per cent to $3,266 million (vs $3,793 million).
“Yuan has also depreciated by eight per cent odd against the dollar which has made exports (by China) more attractive in view of domestic demand remaining depressed,” another trader said.
Exports dip
Incidentally, for Indian mills, export markets saw a 10 per cent moderation YoY, to 3.3 mt for H1FY24. Price realisations saw a 17 per cent dip YoY, to $3,294 million, indicating continued pressure.
Amongst the European buyers, Belgium saw a 13 per cent drop on a YoY basis to 276,ooo tonnes; while both Italy and Spain saw a 35 per cent and 75 per cent increase in orders to 678,ooo tonnes and 273,000 tonnes respectively.
Orders from UAE witnessed a 41 per cent drop to 231,000 tonnes; while across other smaller markets around the world the slowdown was 25 per cent-odd to 1.5 mt.