India turns net exporter of steel to China amid weaker domestic demand
India turned a net exporter of steel to China (and other countries) during April-August 2020 for the first time in several years, credit rating agency CRISIL reported.
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India becomes net exporter amid domestic demand slump
Local consumption in India has slumped. As such, during the aforementioned period, Indian companies exported 60-80% of their steel output.
China accounted for 45% of the total steel exports, according to The Week.
“India turned net exporter of steel to China for the first time in several years, with 69% of semi-finished steel & 28% of finished steel heading there between April & August,” CRISIL said in a statement.
The rise coincided with border tensions rising between India and China, which led to clashes in India’s Ladakh region.
Chinese steel production, iron ore imports rise
China has been the largest producer of steel globally, followed closely by India.
In the January-June 2020 period, China’s steel production rose 1.4% to 499 million tons. Meanwhile, India’s production slumped 24.2% to 43.13 million tons.
The increase in exports, however, has eased the pressure on India’s steel sector. The sector has been buffeted by lockdowns and a major slump in economic activity because of the pandemic.
Incidentally, China imports over 90% of its iron ore, an important steelmaking ingredient.
A slump in the supply of ore to China and high prices have hit Chinese companies hard. From around U.S. $85 per ton in April, iron ore prices surged to U.S. $120 per ton in August 2020.
Steel price rises ahead?
CRISIL has now forecast global steel prices to rise in India to close at $460-490 per ton, or 3-5% lower on-year.
In India, in August, domestic prices rose 8% month over month on account of a mild recovery in domestic demand, Daiji World reported. Prices are expected to decline only 1-2%, also given that anti-dumping duties are in place, CRISIL said.
Steel experts saw this coming, though.
Traders last month said exports to China were up in the April-July 2020 period. Indian steel companies Tata Steel Ltd and JSW Steel Ltd were among Indian companies that sold a total of 4.64 million tons of finished and semi-finished steel products on the world market between April and July, the Financial Express reported. That export total marked a significant increase from the 1.93 million tons exported during the same period a year earlier.
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