India has become a net exporter of steel to China as manufacturers explore global opportunities with the slowdown in domestic demand. Steel exports have accounted for INR 19,267 crores so far this fiscal, while imports are at INR 16,369 crore despite border tensions with China.
With 69 per cent of semi-finished steel and 28 per cent of finished steel heading there between April and August, India turned net exporter of steel to China for the first time in several years, the rating agency said.
Primary steelmakers exported 60-80 per cent of their total production between April and August this year to various destinations, with China leading the pack, it added. Crude steel production fell a lower 27 per cent on-year despite a massive 38 per cent decline in domestic demand between April and August, the agency said. The fall in production was far less severe for export-oriented primary manufacturers with around a 20 per cent decline, compared to a 40 per cent fall in the secondary steel segment.
“However, the jump in exports, by as much as 400 per cent on-year in June, has come off peaks since then, owing to the easing of domestic lockdowns and some revival in economic activity, reclaiming domestic steel demand,” it said. For China, supply disruptions and elevated global iron ore prices led to higher steel imports in these months, given that it imports over 90 per cent of its iron ore requirement.
“While global steel prices were on a slide from end-February till June, iron ore prices soared, led by supply-side disruptions especially in Brazil and Australia.