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India turns net steel exporter to China
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SME Times News Bureau | 21 Sep, 2020
Even as various restrictions are being looked by government agencies to
curb Chinese imports, the neighbouring country has provided big export
support to Indian steel industry saving it from the blushes of a weak
domestic demand and consequent fall in production.
According to a
report by CRISIL Research, India turned net exporter of steel to China
for the first time in several years, with 69 per cent of semi-finished
steel and 28 per cent of finished steel heading there between April and
August.
Indeed, it was exports that saw large primary steel
makers through the peak lockdown months, with 60-80 per cent of their
total production between April and August finding its way to various
destinations, with China leading the pack.
Consequently, crude
steel production fell a lower 27 per cent on-year despite a massive 38
per cent fall in domestic demand (April-August). The fall in production
was far less severe for export-oriented primary manufacturers (20 per
cent decline), compared with secondary steel makers (40 per cent), the
Crisil Research report said.
However, the jump in exports - by as
much as 400 per cent on-year in June -- has come off peak since then,
owing to easing of domestic lockdowns and some revival in economic
activity, reclaiming domestic demand for steel.
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.
Iron ore prices
zoomed past coking coal prices - another first in the past 25 quarters.
This prompted port-based capacities in China to import semis and process
them further in order to save on increased iron ore costs.
More than two-thirds of Indian semi-finished exports were to China in April-August.
Notwithstanding
soaring iron ore prices, global steel prices fell to a low of $409 per
tonne in April, the lowest since October 2016, given weak demand and
limited export opportunities. But demand recovery in China, especially
in the current quarter, aided a 9 per cent on-month rise in steel prices
in August to $502 per tonne.
CRISIL Research expects global steel prices to rise here to close at $460-490 per tonne, or 3-5 per cent lower on-year.
In
India, though, the fall in domestic prices has been limited, owing to
rupee depreciation (which impacts global landed prices). August also saw
domestic prices climb back 8 per cent on-month on account of a mild
recovery in domestic demand. Thus, while global steel prices will
witness a 3-5 per cent drop on-year in calendar 2020, domestic
Prices are expected to decline only 1-2 per cent, also given that anti-dumping duties are in place, the report said.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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