The Coal Trader

Steel Production and Export Pressure Push India’s Steel Trade into a Deficit

India officially reported a trade deficit in steel shipments in the April-October 2023 period. Analysts cited a continue drop in export demand and shifting steel production levels as the primary reasons why they total value of imports was more than that of exports. Furthermore, the continued slow demand from major markets like Europe continues to prove a major hurdle for Indian exporters. What’s more, during the fiscal period from April to October, steel imports from China reached 1.11 million tons, marking one of the highest figures in six years.

According to a report in the Hindu BusinessLine, provisional data by the Steel Ministry showed a substantial increase in year-on-year imports – nearly 50%. The organization attributed the surge to the redirection of competitively priced products to the trade, FMCG, and auto sectors. Additionally, factors such as subdued demand in Europe and increased acceptance in the domestic market contributed to China’s emergence as the primary steel supplier to India.

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Deficit In Trade Totals Billions of USD

Reports indicate that the steel trade deficit was roughly US $188 million (Rs 1,594 crore) during the April-October 2023. Meanwhile, imports of total finished steel for the same period were roughly US $4.1 billion (₹31,354 crore). The total value of exports fell roughly around US $3.9 billion, or 29,760 crore. Import volume was also up by 10% year on year at 3.48 million tons (MT). This proved slightly lower than exports, which amounted to 3.52 MT. That said, one reason for exports being down last fiscal was due to the imposition of duty. 

Steel production in India focused heavily on Hot Rolled Coil.

For nearly two months, starting from the end of September, Indian steel companies have not shown any major international offers. The most recent offers were in the range of approximately $600 per ton. Meanwhile, November saw only a few shipments to the European Union.

Indian Steel Production Sees Marked Increases for Some Products

Hot rolled coil (HRC) and strips ranked number one on Indian steel’s export list. According to the BusinessLine report, these products made up about 36% of total finished steel production in the April–October period. Meanwhile, flat products accounted for 87% share of exports, a decline of 9.5%. The remaining exports consisted of long and other non-flat offerings, a decline of 20.8%.

Surprisingly, the Indian Steel Ministry report indicated that Italy proved one of the largest exporters of Indian steel at 0.701 MT. In Europe other exporters included Spain and Belgium, both of which exported 0.3 MT. In other parts of the world, Nepal (0.34 MT)  and UAE (0.25 MT) proved major exporters. 

India and the EU

On the other hand, it looks like India beat the global trend, with steel prices keeping an upward graph. This was mostly due to high rates of critical raw materials and improved domestic consumption. With regard to crude steel, India was the second-largest producer. Indeed, finished steel production was at 78 MT, a 14% year-on-year increase against the 68.5 MT seen during the April–Oct period. Meanwhile, consumption was 76 MT, a 15% YoY increase.  

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Chinese Moves and “Made in India” Steel

China continues to hold sway over India’s import-export plans. This report from Hindu BusinessLine states that imports from China were 0.75 MT between April–Oct FY23. This is in stark contrast to previous fiscals, which included 0.49 MT for 7M in FY22 and 0.51 MT for 7M in FY21. Moreover, just last month, Indian buyers ordered nearly 0.19 MT of steel from China, one of the largest orders in recent months. Despite increased domestic steel production, Chinese steel prices came out lowest in October, moving between just US $564 per ton and $581 per ton.

Meanwhile, India’s Steel Ministry recently announced its intention to implement “Made in India” labeling for steel export offerings by March next year, a goal originally slated for March 2023. The Ministry outlined the first phase of the initiative, which will include all Integrated Steel Players for the branding and labeling of Made in India steel products in the global market. The Secondary Steel Industries will join the endeavor in the next phase. The aim of this exercise is not only to enhance the appeal of Indian steel products to global buyers but also to ensure a higher standardization of product quality.

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