India: Bulk HRC export shipment up 46% m-o-m in Jun'21

Indian bulk HRC export shipments stood at 991,997 tonnes (t) in Jun'21, significantly up by 46% as compared to 681,076 t seen a month ago in May'21, as per data maintained with SteelMint. However, on an annualised basis, export shipments de-grew by 18% against 1,210,037 t in Jun'20.

Factors driving m-o-m higher exports

1. Better export realisations: Indian mills' interest towards exports increased from the beginning of Jun'21, when domestic trade was comparatively low since buyers were not procuring much due to higher prices. Furthermore, robust demand in the overseas markets, especially in Vietnam, UAE, and Turkey, boosted export volumes in Jun'21. SteelMint’s Indian HRC export index stood at $1,030/t FoB east-coast at the beginning of Jun'21. Meanwhile, in the domestic market, HRC (IS2062, 2.5-8mm) prices stood at around INR 67,500/t (exy-Mumbai). Prices do not include GST extra @18%.

2. Sluggish domestic demand: Major steel mills increased list prices of HRCs by around INR 2,000-4,000/t and CRCs by INR 3,000-5,000/t at the beginning of Jun'21, to bridge the gap between international and domestic prices. However this, in turn, resulted in limited buying and dull demand in the domestic market. Higher steel prices didn’t get absorbed in the trade market and mills shifted their focus to exports.

3. Importers prefer Indian HRCs on China uncertainty: Vietnam, the UAE and Turkey preferred Indian-origin HRC cargoes awaiting an expected announcement on an export tax from China, which so far has not been announced. It was being rumoured that the Chinese government was planning to announce an export tax adjustment in HRCs of up to 20%. Thus, continued uncertainty from China shifted the interest sharply to HRC cargoes from India.

4. Exports to offset dull domestic demand: JSW Steel, in its recent investor's conference call, highlighted that the company reported a sharp increase in its export volumes by 16% to offset the fall in domestic demand due to the second wave of Covid-19. Thus, mills reported a sharp increase in export volumes in Q1FY'22

India's most preferred destination for HRC exports are as follows:

• Export volumes to Vietnam went up to 197,171 t in Jun'21 contrasted against 56,000 t in May'21.
  
  
• Exports to Italy stood at around 243,300 t in Jun'21 in comparison to 103,482 t in the preceding month.
  
  
• Exports to Turkey were 32% higher at 91,200 in Jun’21 as against 69,000 t in May'21.
  
  

Port-wise HRC exports

• Exports from Mormugao Port rose 25% in Jun'21 to 254,017 t as against 202,850 t in May’21
  
  
• Export shipments from Hazria stood at 210,500 t in Jun'21, up by 13% compared to 186,500 t in May'21
  
  
• Exports in Jun'21 through Dhamra and Paradip stood at 133,565 t and 134,852 t respectively.
  
  

Company-wise exports

• JSW Steel remained the leading exporter with 314,031 t of HRCs in Jun'21, up 55% as against 202,850 t a month ago.
  
  
• Tata Steel secured second with export volumes of 281,946 t in Jun'21 in contrast to 150,644 t in May’21.
  
  
• ArcelorMittal stood at third spot with export volumes of 210,500 t in Jun'21 as against 186,500 t in May’21.
  
  
• Bhushan Steel followed with 24,527 t, and Jindal Steel and Power (JSPL) with 25,319 t, apart from others.
  
  

Outlook

Domestic sales remained sluggish owing to higher steel prices and decent inventory among traders. Thus, mills will divert their interest to exports and also explore new destinations for better realisations. Furthermore, uncertainty on the export tax announcements from China continues and offers ample export opportunities for Indian steel producers in the near term.