Posted on 28 Aug 2024
Morning Brief: India's exports of finished stainless steel (SS) products saw a marginal drop of 6% to 355,100 tonnes (t) in the first half of calendar 2024 (H1CY'24) compared to 378,100 t seen in H1CY'23.
Notably, within this total corpus, flats exports saw a significant drop of 15% to 145,812 t in this period under review from 170,555 t in H1CY'23.
Looking at the grade-wise exports, the 400 series experienced a significant decline of 27%, with exports dropping from 15,622 t to 11,340 t in H1CY'24. Additionally, the 300 Series experienced a 5% reduction, with exports decreasing to 182,110 t. In contrast, the 200 Series saw a notable increase of 24%, rising from 6,972 t to 8,659 t. Additionally, other series faced a 7% decrease, with exports declining to 153,004 t.
In the overall country-wise exports in H1CY'24, Italy was the leading export destination for India, representing around 12% of the country's total exports. It was followed by Germany, Belgium, and South Korea.
Reasons for the fall in SS flat exports in H1
Higher Chinese export allocations hit Indian mills: Increased Chinese stainless steel export allocations negatively impacted Indian mills' overseas sales. With home demand for SS down following the real estate sector meltdown, China targeted key markets such as Vietnam, the Middle East, Turkiye and India as happy dumping grounds for its SS at cut-throat pricing, giving Indian mills stiff competition. In the first half of 2024, China's stainless steel exports touched 2.36 million tonnes (mnt), a 16% y-o-y increase.
To capture a major share of the global market, China employed aggressive pricing strategies. Chinese CNF offers to India were lower than the latter's domestic SS prices.
Notably, China's finished flat SS imports to India rose 8% in H1CY'24 to 305,176 t from 283,347 t in H1CY'23.
Increase in imports of finished flats: India's imports of finished SS flat products saw an increase of 7% to 487,847 t in H1CY'24 from 455,212 t in H1CY'23. Such imports kept India's domestic SS production range-bound, which rose a mere 2% y-o-y in H1. Stable production also left mills with lower export allocations. Flats production rose a modest 4% and longs fell into negative zone.
Sharp decline of shipments to Russia, Turkiye: Exports of finished stainless steel to key markets like Russia and Turkiye fell H1CY'24, dragging down overall volumes. Volumes to Russia showed a sharp 66% y-o-y decline in H1 to around 20,000 t and to Turkiye by 10% to 25,000 t.
A few major mills exporting to these key markets said that extended transit times, increased freight costs because of the Red Sea crisis, and a shortage of containers were major factors behind the drop in cargoes to these destinations. Container costs have increased by up to 300% in some instances and doubled on average across different routes.
Jindal Stainless (JSL) saw its exports dropping to 10% in the first quarter (April-June, 2024) from 17% a year ago due to stagnant growth. The company faces increased freight costs and extended transit times but plans to expand break-bulk shipping after successful initial trials.
Korea demand slows amid maintenance shutdowns: In Q2CY'24 (April-June), South Korea's demand for stainless steel was low due to annual maintenance shutdowns taken by several SS mills. However, these furnaces resumed operational from June and continue to be active in the third quarter. Korea is amongst the top four importers of SS from India. Its volumes fell 6% in H1 to around 28,000 t.
Outlook
Looking ahead, India's SS production may remain lower because of the monsoon rains in some regions and the summer vacation period under way in Europe. These factors may naturally impact India's exports of finished stainless steel goods as allocations main be kept on the lower side. However, a demand recovery is anticipated in late 2024 and early 2025.
Source:BigMint
