India’s steel imports from China are at a five-year high and the latter is now the largest exporter of steel to India in value terms, overtaking Korea.
Nearly 0.41 million tonnes (mt) of steel has come in from China in Q1FY24, indicating a 30 per cent jump since Q1FY20’s 0.30 mt and 60 per cent up YoY from 0.26 mt in Q1FY23, even as Indian traders continued buying deep-discounted Chinese offerings across categories like cold rolled coils, sheets and plates.
Cold rolled coils are the second most imported steel item in volume terms (after hot rolled coils/sheets), at 0.38 mt and highest in value terms, at $459 million, during the period under review.
- Also read: India’s Q1 steel exports lowest since FY21
According to TV Narendran, CEO and Managing Director, Tata Steel, Chinese exports (to India and other markets worldwide) were 8 mt a month, one of the highest since 2016, and “certainly a cause of concern”.
“But we believe that it’s an outcome of Chinese steel producers producing more in the Jan-March quarter in anticipation of an economic recovery, which didn’t happen,” he said during an investor call.
Increased buying
In Q1FY24, Chinese shipments were valued at $512.4 million - the highest since Q1FY20 when they were at nearly $333.1 million. As per a report of the Steel Ministry, accessed by businessline, in Q1FY23, imports were valued at $391.7 million. During Q1FY22, imports were 0.21 mt and $261.3 million in value. In Q1FY21, it was 0.27 mt in volume and $164.1 million in value terms.
Stainless steel and alloyed steel imports maintained a more or less upward trajectory throughout this five-year period – rising from 0.122 mt in Q1FY20 to 0.193 mt in Q1FY21, then dropping to 0.14 mt in the first quarter of FY22 (because of Covid-led restrictions in China) and again shooting up to 0.19 mt last fiscal. In Q1FY24, it was 0.18 mt.
However, a sharp upward trajectory was reported in the import of non-alloyed steel during this period. From 0.17 mt in Q1FY20, it has now gone up to 0.233 mt in Q1FY24 – a 34 per cent increase. Non-alloyed steel shipments coming in between FY21 and FY23 had declined.
For the most part of this year’s April – June period, Indian traders reportedly picked up, or entered into buying agreements with Chinese suppliers, at a $30 - $50 per tonne discount, said trade sources. Price offers were around $500 - 600 per tonne range for benchmark hot rolled coils & strips (HRC).
Tata Steel’s Narendran said due to higher steel exports from China, there was a moderation of global steel prices between May and June. But over the next few months, such exports could come down to 5 - 6 mt levels. “They also have carbon reduction targets... And we expect the second half of the year to be more balanced,” he said, adding that falling Chinese exports will lead to the HRC prices moving up in the “$600/tonne - $650/tonne” range.
In volume terms, Korean supplies to India declined 4 per cent to 0.5 mt in Q1FY24. But shipments from Vietnam, Japan and Taiwan rose. For the quarter, India’s steel imports increased 20 per cent YoY to 1.4 mt.