India saw a surge in steel shipments from China, up nearly 50 per cent on a year-on-year basis to 1.34 million tonnes (mt), and a 500 per cent rise in offerings from Vietnam to 0.5 mt – supposedly a country through which more Chinese imports were being routed - led to a sectoral trade deficit for the April – November period.
Apart from becoming a net importer of steel, reversing a three-year-trend, India ‘s steel trade deficit widened to Rs 2400 crore (apprx) for the period under review as imports continued to exceed exports.
Imports from China and Vietnam are already at multi-year highs; with the former accounting for a third of the imports in value and 31 per cent-odd in volume terms.
Incidentally, India is among the largest suppliers of iron ore, a key steel-making component, to China.
Chinese Exports Zoom
The latter (China) is already saddled with excess steel stocks, considering its depressed property market and slow moving infra projects, and continues to push offerings in export markets at alleged lower than production costs.
It has also routed offerings through Vietnam, Indian traders say.
In November, China’s finished steel exports rebounded to the fourth highest so far in 2023 at 8.005 mt, up 0.3 per cent on the month and 43.2 per cent on the year, China’s customs data showed. Over January-November, steel exports increased 35.6 per cent, or 21.7 million mt, on the year, to 82.658 million mt.
Trade Deficit in India
As per a report of the Union Steel Ministry, accessed by businessline, finished steel imports during this eight-month-period was valued at ₹36,813 crore ($4,455 million) whereas export stood at ₹34,420 crore ($4,165 million).
In volume terms, imports exceeded exports by 0.3 million tonnes (mt). Imports were at 4.3 mt, up 14 per cent Y-o-Y, outpacing exports at 4.0 mt, down six per cent.
Changing Trade Dynamics
China emerged as the highest seller of steel, displacing Korea and Japan – the traditional markets. While there was a 15 per cent Y-o-Y drop in imports from Korea to 1.28 mt, Japan managed to increase imports by 35 per cent to 0.6 mt.
A 50-odd per cent increase in volume sales notwithstanding the Chinese shipments of the alloy (finished steel) saw just a six per cent jump in prices (in dollar terms) Y-o-Y at $1,453 million (₹12,000 crore) vs $1,374 million (₹11,000 crore). Semi-finished imports from China, although relatively small, saw a 388 per cent jump Y-o-Y to $21.3 million.
“This indicates shipments came in at prices lower than the existing trade / international price or even the domestic market price, after adjusting for the dollar which stood at ₹82 this year, as against ₹80 last year,” a trade source said.
In fact, overall steel prices remained depressed and on a Y-o-Y basis; down 17 per cent to $4,455 million (despite rise in volumes) for the eight month period; the Ministry report showed.
Chinese shipments of the alloy into India was primarily in hot rolled coils and strip, cold rolled coils, galvanised sheets and coils, pipes, and in the steel & tin plates segment. It gained an advantage over Korea in categories like galvanised sheets and coils, plates, pipes, among others.
“Volume wise (cumulative basis), HR Coil/Strip (1.773 mt and up by 45.4 per cent Y-o-Y) was the item most imported (at) 42 per cent share in total finished steel,” the Ministry report mentioned.