India's HRC/Plates exports registered an increase of 31% in CY '20 y-o-y, as per the data maintained by SteelMint.
Steel manufacturers dispatched around 7.11 mn t HRC/Plates in CY '20 against 5.42 mn t in CY '19. Vietnam emerged as the top importer. However, export volumes which stood at 0.34 mn t in Dec '20 registered a decline by 17% on a monthly basis and 23% annually.
SteelMint analysis of the factors driving the exports:
1. Nation's exports increased amid lockdown- Major Indian steel mills have aggressively exported HRC to Vietnam, China, and UAE due to the announced lockdown in India during the pandemic. Mills were dependent on the exports to stay afloat on mute domestic demand. Mill usually exports not more than 16-17% of its production but in April almost 100% of it went into exports. In May, the figure reduced to 80%, and in June, with the domestic market opening up, overseas sales came down to 30-35%.
2. Dried demand in the domestic market- Limited domestic off-take in India in Apr and May due to lockdown pushed mills to put out more export offers. Manufacturing and construction works were mostly shut down in Apr and May. The domestic HRC market picked up with restocking activities in Jul '20 with the unlock phase coming into effect.
3. Cheaper export offers attracted importers- At the beginning of Apr '20, Indian HRC export offers stood at around $395-400/t CFR Vietnam. Low-priced imports attracted Chinese buyers and they heavily imported slab, billets, and HRC from India at attractive prices.
4. Lower capacity utilization- Indian mills increased their capacity utilization to 80-85% in May against 30-40% in Apr '20. Indian auto companies were operating at a lower utilization level and gradually resumed operations by the end of Apr but with 20% capacity utilization.
Country-wise exports- Indian exports to Vietnam increased by 5% to 2.47 mn t in CY '20 against 2.35 mn t in CY '19. However, in Dec '20 it declined by 9% m-o-m and by 50% annually.
Furthermore, export volumes to China aggregated to 1.93 mn t in CY '20, no exports were made in CY '19. Other importing nations in CY '20 included Italy at 0.59 mn t, UAE at 0.79 mn t, and Nepal at 0.38 mn t.
Company-wise exports- JSW steel exported 2.14 mn t, Tata steel at 2.11 mn t, AM/NS India at 1.17 mn t, followed by Tata BSL at 1.10 mn t, and SAIL at 0.43 mn t in CY '20.
Outlook- Post lockdown, Indian mills have significantly reduced their export volumes and raised domestic prices sharply on limited supplies and robust demand. Going forward the strategy of the major mills is to shift the focus to domestic supplies and restrict exports. JSW's exports have been reduced to 28% of the total sales in Q2 FY '21, as per company's investor report. In JSPL's investor conference call for Q2 FY '21, the company has planned to cut down its steel exports to a 20% share of total sales. Revival in domestic demand has resulted in a reduction in the share of exports.