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India's steel exports rise on lower prices

09 Jan 2018 08:07 GMT
India's steel exports rise on lower prices

Singapore, 9 January (Argus) — India's steel exports increased by 52.9pc from a year during April-December to 7.6mn t, as lower prices of hot-rolled coil (HRC) and rebar compared with China allowed it to generate higher sales in key Asian markets.

India was a net importer of steel in the 2015-16 fiscal year ending 31 March with large volumes of imported steel from China, Russia, Japan and South Korea eating into margins of mostly flat producers. But after Delhi imposed anti-dumping and safeguard duties on flat steel, the import flows slowed, while firm domestic demand in China raised their export offer prices. This allowed Indian producers to boost exports in 2016-17 and become a net exporter. China's robust domestic demand has kept offer prices high for the past several months, allowing India to increase sales in major markets such as Vietnam and the Philippines. Exports so far in 2017-18 have led imports by around 1.5mn t.

The bulk of India's steel exports comprises HRC of more than 600mm width, with Vietnam being the key buyer. For January-October, the latest period for which a product breakdown is available, HRC exports were 4.47mn t, up by 207pc from a year earlier. Around 29pc of the exports were to Vietnam, with Italy, the UAE and Malaysia the other major buyers.

Prices of Indian HRC in Vietnam were at around a $10-20/t discount to Chinese offers last month. While Indian offers were around $560-580/t cfr Vietnam, Chinese offers were around $580-600/t. But Indian HRC offer prices for March delivery have increased to around $600-605/t cfr Vietnam this month, on level with Chinese offers, although prompt Indian shipments are cheaper at around $565/t.

Most of India's rebar and wire rod exports, of around 570,000t, made their way to Singapore, Hong Kong and Nepal during January-October. The absence of import duties and thriving construction markets make Singapore and Hong Kong favoured destinations for long products exporters globally. Nepal, which is having extensive reconstruction after its devastating 2015 earthquake, imports large volumes of industrial products from neighbour India.

India's crude steel output grew by 4.6pc during April-December, the first nine months of 2017-18, to 75.5mn t. This was below analysts' expectations of 6-8pc growth at the start of the fiscal year. Output growth has been driven by the six large integrated steel producers Tata, Sail, JSW, Jindal, Vizag and Essar that boosted output by 6.5pc. Smaller domestic producers increased output by 2pc. Smaller producers, which mostly use electric arc furnace and induction furnace to produce long products, have been hit by sluggish growth in the real estate market over the past couple of years. Domestic consumption grew by 5.2pc during April-December.

India unveils its federal budget for 2018-19 on 1 February, the last full-year budget of the ruling BJP government before federal elections. The budget could throw up a further increase in spending on infrastructure projects, especially in rural areas, as the BJP looks to appeal to voters ahead of the 2019 elections. Expected cuts in income tax for the middle class and cuts in corporate tax rates could also boost consumer goods, real estate sales and industrial investment.

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