Robust Indian Steel Export Volumes Unlikely to Sustain: ICRA

SEATTLE (Scrap Monster):  The ratings agency, ICRA, said that India may not be able to sustain the recent strong volumes in steel exports out of the country in the near term. It must be noted that the country had recently reported substantial surge in steel export volumes, primarily on account of muted domestic demand.

The finished steel exports totalled 1.71 million tonnes in the initial two-month period (Apr ’20- May ’20) of the current fiscal. The exports surged higher by 76% from the comparable period last fiscal year. The exports of semis skyrocketed by 281% during this period to total 1.29 million tonnes. China, with nearly 48% market share, emerged as the largest export market destination of finished steel and semis from India.

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However, ICRA noted that the increased steel exports could only be considered as a stop-gap arrangement during the period of extended muted domestic steel demand, on account of prolonged lockdown period. The steelmakers in the country resorted to exports even at less remunerative prices, as part of efforts to liquidate the existing inventory.

As of now, the wide gap between the steel prices in the domestic and export markets has narrowed down in the months of June and July. The projected recovery in domestic steel demand, coupled with strengthening rupee against the US dollar is likely to reduce steel exports in the forthcoming months, ICRA noted.