India continues to play a bigger role in international steel trade but this year has switched to focus supply on Europe
than China and Vietnam, S&P Global Platts said in its report today.
Last year India exported significant volumes of steel to China and Vietnam at a time when its economy had yet to recover from the pandemic. This year, however, India has largely switched its "swing supply" focus to Europe
as northern European hot-rolled coil (HRC) prices in January were around $65 per tonne higher than Indian domestic HRC prices.
As of April 12, 2021 prices of the steel product were $300 per tonne higher, informed Platts.
India has already exceeded its European Union (EU) quota by around 40,000 tonne this year but is hoping that the steel will be allowed given the coil shortage in Europe.
Meanwhile, the knock-on effect is that domestic steel supply has become even tighter, which is set to be compounded by planned maintenance works at JSW Steel, Tata Steel and the Steel Authority of India Ltd. This follows a fall in crude steel production of 3.1 percent on year to 9.1 million tonne in March.
Due to this, Indian HRC prices may rise further over April-May before starting to ease with the onset of monsoon season, which slows downstream activity.
Unlike their counterparts in China and Japan, Indian manufacturers are struggling to pass on rising input costs to their customers, said the report.
Steel supply should start to ease toward mid-year as production is restored. Demand should strengthen in most countries on the back of government stimulus programs. But the pandemic remains a negative influence until vaccination programs are widely rolled out, it said.
There are now more moving parts than ever in global steel markets, and with supply and demand often out of kilter, export opportunities for India will undoubtedly continue to present themselves in Q2.