Indian Steel Exports to EU Grow

Much has been made of the meteoric rise of Chinese steelmaking over the past decade but as we have discussed before this peaked in 2014. There is another major Asian steel producer, believed to be the lowest cost major producer in the region, that has more than doubled crude steel production since 2005 and is continuing to grow, posting a record 95.6 million tonnes last year, a growth of 7% compared to the global growth rate which was just 1%.  After the record tonnage posted last year, in the first five months of 2017, Indian crude steel production grew by another 7%.  At this point in 2018, if the rate of growth stays the same, India will have overtaken Japan to become the second largest producer of steel in the world.

This growth in steel production has coincided with a decline in imports. At just under 10 million tonnes, imports are relatively modest for a country of this size and last year they collapsed by 25%.  This decline has continued into the first quarter of 2017 with Q1 imports declining by another 43% year on year with falls seen across most products.  There have been declines in supplies across most origin countries but Brazil and China seem to have been hardest hit.  Whilst China is still, just about, the largest supplier of steel to India, imports have decreased by 64% so far this year as anti-dumping legislation has taken effect.

Conversely there has been a huge increase in exports. Last year there was a 37% growth in exports and at 10.3 million tonnes, the country became a net steel exporter for the first time. So far this year, export growth has accelerated considerably and Q1 saw a 157% hike in exports to more than 5 million tonnes which, if maintained for the rest of the year, would make the country the 6th largest exporter in the world.  The growth has mostly come from HRC, CRC and semis with the EU accounting for the bulk of this increase.  Indeed, in Q1 alone, India increased exports to the EU by more than 1.2 million tonnes with Italy, Spain and Belgium seeing most of this growth.

According to the union minister of steel, the country is targeting a trebling of last year’s production total by the end of 2031 with the focus being on higher-value finished products. Although projections for internal steel demand are also high, it seems clear that a proportion of this growth will make its way into exports.

We have a situation where India is likely to become the second largest producer of steel in the world next year, where imports are dropping, being discouraged by robust anti-dumping legislation, and exports are set to more than double, with EU markets being the main targets. Having been a net steel consumer in the past, India is now becoming a major supplier to the global market, at least in specific product areas and to certain markets.

Indian Steel Exports to EU Grow

Indian Steel Imports Grow – May 2015

Following the well documented decline in Chinese steel demand growth, there have been concerns over whether Chinese steel makers can find new markets for their products and the potential consequences of a huge amount of excess steel making its way on to the global market. Fortunately we have seen recovering demand in the US and EU partially mitigate the declines seen in China and provide markets for Chinese steel but the increasing likelihood of anti-dumping measures and other initiatives to protect the domestic steel industries in these regions could restrict the amount of steel that finds its way into these markets. There could be another country that has the potential to absorb some of this surplus steel, however.

After Mohdi’s BJP party came to power last year, the Indian economy has seen substantial growth with a GDP increase of 7.5% in Q4 last year. This growth can also be seen in the country’s crude steel production. In 2014 production increased by 6.4%, a trend that has continued into this year with Q1 2015 production up some 9% year on year. The increase in demand for steel in India did not solely come from the increase in internal production. Imports rose by 28% during the year to 9.5 million tonnes. The largest contributors to this increase were hot rolled wide strip, up 28%; Wire rod, up more than 150%; and CR flat products, up 25%. Importantly the vast bulk of these increased imports came from China, with India accounting for nearly 1.9 million tonnes of extra Chinese tonnage last year with imports from the country more than doubling.

This trend has continued into this year with imports in January 2015 nearly doubling to 1.1 million tonnes with imports from China increasing by 145% to 362K tonnes. With the Indian economy showing no signs of slowing down so far this year, if imports from China continue at the current rate, India could account for another million tonnes of steel from the country by the end of 2015, thereby helping to take some pressure off the global steel industry and possibly provide an outlet for some Chinese steel makers.

Indian Steel Imports Grow – May 2015