Indian Steel Export Prices Fall To Lowest Globally As Demand Falls
Prices fall when outbound shipments were making up for decline in domestic demand.
Indian steel export prices have fallen to the lowest level globally in a worrying sign when outbound shipments were making up for fall in domestic demand.
Export prices of the alloy stood at $750 a tonne in December, according to data provided by Edelweiss Securities and Bloomberg. That’s the lowest in over a year globally, ranking below countries in the Commonwealth of Independent States region.
That comes when domestic demand has been lacklustre, and costlier coking coal is expected to squeeze margins in the ongoing quarter ending December.
Indian steelmakers have increased exports to cushion against declining domestic demand. Already, producers in Asia’s third-largest economy are selling more than a quarter of their output in the international market, according to data provided by ICRA Ratings Ltd. and company statements. That proportion may only rise further.
Yet, despite falling prices they may have to continue with exports as the Omicron variant of the coronavirus threatens to disrupt demand. Something that was seen during the second wave of the pandemic in the quarter ended June.
Still, Amit Dixit, assistant vice president-research at Edelweiss Securities, is optimistic. Demand in China is expected to rebound because of the possibility of policy support, particularly in the struggling real estate sector, as early as January 2022.
China, the world’s largest producer, was curtailing output to meet its targets to curb pollution and energy intensity, Bloomberg reported in September. That could hurt demand in one of the world’s largest producer and consumer of raw materials.
“The demand-supply balance in China is likely to sustain as higher production (post-December 2021) by mills in the hinterland would be counterbalanced by better demand,” Dixit said.