Indian steel exports witnessed its first uptick this fiscal with there being an 11 per cent sequential rise in October (compared to the previous month) to 0.44 million tonnes (mt). Outbound shipments in September were 0.4 mt.. Imports for the month also moderated, for the first time this year, as India tightened import norms (including for non-BIS offerings) to 0.98 mt, down 4 per cent sequentially, as per a report of the Steel Ministry accessed by businessline. September imports was so far the highest this fiscal at close to 1.1 mt.

On a y-o-y comparison, imports continued to be at elevated levels, up 34 per cent indicating continued stress; while exports too witnessed an uptick – up 51 per cent. In October last year imports were 0.273 mt, and exports were at 0.29 mt. However, exporter margins continue to remain compressed.

For the first seven months of the fiscal (Apr – Oct), the country was a net importer of steel with incoming shipments at 5.72 mt (up 40 per cent y-o-y) surpassing exports of 2.75 mt, by 2.97 mt, as per the provisional numbers available with the Ministry.

“Imports came down on account of India imposing quality controls and some stringency in non-BIS offerings. Moreover, with the Chinese stimulus announced, there was an arrest in steel trade price slide in India. This helped with recoveries in October. But, yes, margins for domestic steel makers continue to be under pressure,” a Ministry official said.

Indian exporters were able to tap overseas markets like Middle East and Europe, as price difference with Chinese offerings was significantly down in these markets.

“Hopefully, exports to Middle East markets will be long term sustainable now that the Chinese stimulus has played out, and they are reportedly cutting back on the metal production there,” a major exporter said.

“European economies are still under stress. So sustaining momentum there is a bit of a challenge,” the exporter added.

In fact, in October, Chinese steel prices here were apparently quoted at a premium of around ₹3000 per tonne (for specific products); as compared to domestic offerings.

International prices are improving at $480-520 per tonne levels, from $450 per tonne levels.

Pressure on Indian steel mills

For the July-September quarter, Indian mills continued to be under-pressure with shipments in overseas markets.

TV Narendran, MD and CEO of Tata Steel, during a recent investor call, said, the company would not be exporting at prices where it was “losing money”. Exports for the company has been in the 10 per cent range.

“The next six months will be crucial for us to see if they (China) go back to 50 mt levels or not (in exports),” Narendran said.

Steel companies have focussed on domestic market rather than export markets.

PSU major SAIL’s top brass during an investor call said the company faced increased competition from other steel companies in India leading to a loss in market share.

India’s finished steel production for April to October period stood at 82.65 mt, up 4.4 per cent y-o-y with over 86 per cent of it (71mt) coming from the private sector.

Consumption continued to witness strong double digit growth of 13 per cent, the Ministry report said.

Improved sentiments

SAIL’s top brass confirmed improvement in domestic steel prices, specially for long products – up by 2 per cent-odd sequentially to ₹53,000 per tonne (in October) and at “similar levels in November”.

Meanwhile, for flat products, realisations “were still in a challenge”, down 4 per cent sequentially to ₹47,000 per tonne (vs ₹49,000 a month back).

Blended realisations for the company was around ₹48,000 per tonne in October. And, in November it improved to ₹48500–49,000 per tonne. The average price for Q2 (September quarter) was ₹50,500 per tonne. A blended realisation means averaged out price across long and flat products both.

Jayant Acharya, Joint MD and CEO, JSW Steel – the largest steel-maker in India in volume terms – said, post a slump in September when pricing had gone down steeply, there is some improvement in current scenario. Channel stocks are down and “restocking demand and demand from the institutional customers have improved”.

“Retail was impacted by import sentiment, exports were lower....We now expect retail restocking to start. Pricing we feel will remain positive because of a seasonally stronger Q3 and Q4. So that will aid margin expansion as we go into H2,” he said during an investor call.

JSW has initiated price hikes in October for both flat and long products. While as per market sources, Tata Steel too had initiated hikes last month, but these were lower than July peak.

Related Topics