INDEX: Introduction Prices Exports Imports Production Conclusion
INTRODUCTION 2016 remained a cheerful year for Indian steel market. With government s timely safeguard measures to protect domestic steel industry from the global steel glut has given sense of relief to the Indian steel makers. Flat Steel prices increased sharply in Q4 2016 amid rise in production cost over surge in coking coal offers. India s crude steel production witnessed increase in 2016 with production ramp up of major Indian steel biggies primarily - JSW Steel, SAIL, Tata Steel and Essar Steel. Trade barriers has restricted entry of cheaper lat steel imports to India. On the other hand, Indian steel exports are gaining momentum with price hike in global market. MIP announced on Steel products bythe government for six months Indian govt extends safeguard duty on HRC till 2018 duty recommended for four successive years were - 20%,18% 15% and 10% Govt imposes provisional anti dumping duty on HRC and Plates Indian govt extends safeguard duty on HR Plates and Sheets till 2019. Duty recommended for first three years are as follows: 10%, 8% and 6% Govt imposes provisional anti dumping duty on CRC Indian govt. further extended MIP on 66 steel products till 04 Oct 16 Indian govt. further extended MIP on 66 steel products till 04 Dec 16 DGAD recommends anti-dumping duty on colour coated steel Indian govt. imposes safeguard duty on HR plates and sheets. Duty applicable for first three years are as follows: 10%, 8% and 6% Indian govt. further extended MIP on 19 steel products for two months
PRICE- FLAT STEEL PRICES JUMPED SHARPLY OVER SURGE IN COKING COAL PRICES Domestic Flat steel Price Trend in 2016 Prices in INR/MT, inluding ED, VAT/CST extra 45,000 43,000 41,000 39,000 37,000 35,000 33,000 31,000 29,000 27,000 25,000 Jan 16 Feb 16 Mar 16 Apr 16 May 16 HRC PRICES (Ex-Delhi) June 16 Indian govt. announced anti-dumpingin Aug 16on HR coils, plates, sheets and CRC imports which led torise in prices July 16 Aug 16 Sep 16 Indian steel makers hiked prices amid rising coking coal prices Oct 16 Nov 16 CRC PRICES (Ex-Delhi) Dec 16 Domestic & Global Flat Steel Price Trend in 2016 PARTICULARS CURRENCY Q1 2016 Q2 2016 Q3 2016 Q4 2016 HRC, Ex-Delhi INR 32,120 35,200 34,700 39,480 HRC, FoB India HRC, FoB China HRC, FoB Black Sea CRC, Ex-Delhi INR 320 290 275 36,740 392 384 421 40,450 408 375 370 40,000 474 446 446 45,400 CRC, FoB India CRC, FoB China CRC, FoB Black Sea 406 340 332 520 461 478 488 416 416 562 520 517 Plates, ex-mill India Plates, FoB China INR 26,200 300 30,800 377 28,970 353 33,200 426 Prices indicated are quarterly average and in per tonne basis Source: SteelMint Research
Key Highlights: Indian flat steel prices underwent two sharp price hikes in 2016. One was after imposition of anti-dumping duty against cheaper imports in Aug 16, which gave enough room to Indian steel makers to raise offers. And the recent price surge of INR 3,000/MT in Dec 16 was done to pass on the increased cost of production over increased coking coal prices Surge in coking coal prices and hike in China s domestic steel prices backed by stronger demand pushed Chinese HRC, CRC export prices sharply in Q4 2016. CIS HRC export offers experienced two waves of price hike in 2016. Price hikes were driven by surge in coking coal and iron ore prices in global market. On other side, trade barriers in their export markets have also strengthened.the European Commission started an anti-dumping probe into imports of HRC from Brazil, Iran, Russia, Ukraine and Serbia in July following which export volumes of major CIS based companies dropped.
EXPORTS - PRICE HIKE IN GLOBAL MARKET BOOSTED INDIAN FLAT STEEL EXPORTS IN H2 2016 Qty in MnT Indian Flat Steel Exports 2016 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Jan 16 Feb 16 Mar 16 Apr 16 May 16 June 16 July 16 Aug 16 Sep 16 Oct 16 Nov 16 Electrical Sheets (CH-7225) GP/GC (CH-7210) CRC (CH-7209) HRC/HR Plate (CH-7208) Source: Customs Product-wise Flat Steel Exports from India in 2016 MONTH HRC/HR PLATES (CH - 7208) Jan'16 Feb'16 Mar'16 0.03 Apr'16 May'16 0.16 Jun'16 0.14 Jul'16 Aug'16 0.27 Sep'16 0.27 Oct'16 0.17 Nov'16 0.18 Total 1.38 CRC (CH - 7209) GP/GC (CH - 7210) 0.04 0.09 0.05 0.13 0.05 0.15 0.06 0.13 0.06 0.16 0.07 0.17 0.18 0.11 0.23 0.12 0.16 0.12 0.15 0.15 0.87 1.71 ELECTRICAL SHEET (CH - 7225) TOTAL 0.04 0.19 0.21 0.25 0.01 0.21 0.38 0.38 0.39 0.01 0.62 0.57 0.01 0.46 0.45 0.15 4.10 Qty in MnT Source: Customs
Country-Wise Indian Flat Steel Exports 16% Belgium Italy Vietnam Malaysia 5% 10% 39% UAE Spain Djibouti USA Others 9% 7% 6% 5% 4% 4% Key Highlights: With increase in prices of global market, flat steel exports from India gained momentum in later half of 2016. Out of 4.11 MnT flat steel exported from India during Jan-Nov 16, share of GP/GC (CH-7210) was largest nearly 42% followed by HRC/HR plates (CH-7208) at 34%, CRC (CH-7209) at 21% and Electrical sheets (CH-7225) at 3%. Belgium remained the most preferred destination and it accounted for 16% of Indian flat steel exports, followed by Italy at 10% and UAE at 9%. Other major nations for India s flat steel exports were - Spain, Vietnam and Malaysia.
IMPORTS - PROTECTIONIST MEASURES RESTRICT FLAT STEEL IMPORTS TO INDIA Qty in MnT Flat Steel Imports to India in 2016 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Jan 16 MIP announced by the government for six months on imports of 173 steel products including HRC/Plates and sheets. Feb 16 Mar 16 Final decision on safeguard duty case on HRC announced by the Indian government and duty extended till 2018. Apr 16 May 16 June 16 July 16 DGAD announces imposition of antidumping duty on HR coils,sheets & plates from China PR,Japan, Russia, Korea RP, Brazil &Indonesia. Indian government imposes safeguard duty on imports of HR plates and sheets valid till first half of 2019. Aug 16 Sep 16 Oct 16 Nov 16 Electrical Sheets (CH-7225) GP/GC (CH-7210) CRC (CH-7209) HRC/HR Plate (CH-7208) Product-wise Flat Steel Imports to India in 2016 Source: Customs MONTH HRC/HR PLATES (CH - 7208) Jan'16 0.34 Feb'16 0.20 Mar'16 0.36 Apr'16 0.21 May'16 0.18 Jun'16 0.24 Jul'16 0.17 Aug'16 Sep'16 0.16 Oct'16 0.12 Nov'16 0.18 Total 2.25 Qty in MnT Source: Customs CRC (CH - 7209) GP/GC (CH - 7210) 0.17 0.15 0.18 0.14 0.05 0.12 0.06 0.11 0.06 0.08 0.07 0.08 0.09 0.11 0.12 0.08 0.12 0.06 0.13 0.87 1.14 ELECTRICAL SHEET (CH - 7225) TOTAL 0.17 0.83 0.20 0.71 0.13 0.78 0.09 0.46 0.07 0.36 0.09 0.38 0.40 0.33 0.09 0.37 0.15 0.35 0.42 1.28 5.46
Country-Wise Flat Steel Imports to India 2% 2% 11% 6% 32% 39% South Korea China Japan Russia 19% Austria France Other 29% Key Highlights: Flat steel imports to India have come down post imposition of trade barriers like MIP, Anti-Dumping Duty and Safeguard-Duty. India imported 5.46 MnT flat steel from Jan-Nov 16 Out of which share of HRC/HR plates (CH-7208) import was highest at 41% followed by electrical sheets (CH-7225) at 23%, GP/GC (CH-7210) at 21% and CRC (CH-7209) at 15%. South Korea accounted for major share in India s flat steel imports with 32% share followed by China at 29% and Japan at 19%.
PRODUCTION - INDIA S CRUDE STEEL PRODUCTION UP 7% Y-O-Y FROM JAN-NOV 16 Fig in MnT 8.4 8.2 8 7.8 7.6 7.4 7.2 7 India s Crude Steel Production Jan 16 Feb 16 Mar 16 Apr 16 May 16 June 16 Major steel makers ramped up production significantly in Q3 2016 July 16 Aug 16 Sep 16 Oct 16 Nov 16 Source: Joint Plant Committee Crude Steel Production of Major Indian Steel Makers STEEL MAKERS JSW Steel 3.22 SAIL 3.68 Tata Steel 2.56 Essar Steel 1.23 Q1 Q2 Q3 3.99 3.55 2.43 1.22 4.14 3.56 2.79 1.32 Q4 (TILL NOV 16) 2.57 2.35 2.06 NA Fig in MnT NA-Not Available Source: Joint Plant Committee
Key Highlights: India s crude steel production during the time period of Jan-Nov 16 was recorded at 87.80 MnT, up 7% Y-o-Y. Flat steel production of major Indian steel maker s has increased more sharply compared to their long steel output. JSW Steel - India s largest steel producer in terms of crude steel production has significantly raised its production. The company plans to achieve crude steel production of 15.75 MnT in FY17, up 25% against its last year s achieved crude steel output. Tata Steel is also ramping up production at its Kalinganagar unit. The company in Q2 FY17 results announced that it has already achieved production of 1 MnT of Hot Metal in less than six months of formal commissioning. The company expects to produce and sell more than 1.3 MnT in FY17.
Global Flat Steel Trade Flows Belgium 3.29 Germany 0.03 0.80 2.50 China 11.04 South Korea Japan 9.20 India 1.53 0.73 Vietnam 4.35 1.06 0.01 Indonesia EXPORTERS/ CHINA JAPAN SOUTH KOREA IMPORTERS South Korea 11.04 Vietnam Germany Indonesia India Others Total 9.20 4.35 2.50 58.28 85.4 1.06 0.80 19.3 21.2 Quantity in MnT Provisional Data Source: Customs Note: China Export data includes Long Product also, as specifically for Flat Products data is not available. 0.01 0.03 3.29 0.73 1.53 14.74 6.43 BELGIUM GERMANY OTHERS TOTAL 8.89 4.11 0.18 0.31 26.88 11.0 9.2 7.46 6.3 5.1 134.52 17.0 9.7 8.9 31.49 173.7
INDIA FLAT STEEL INDUSTRY IN 2017- AN OUTLOOK SteelMint expects Indian steel makers to raise domestic prices in Q1 2017. However bullishness in sentiments may not continue considering the sluggishness in domestic demand. Traders are expecting domestic demand to remain dull. However on the other hand, India's largest car maker - Maruti Suzuki India Ltd recently said that it has started to see an uptick in demand for its vehicles after weeks of sluggishness caused due to demonetization. As per reports, company's retail sales in the festive months of October and November were 6-7% higher Y-o-Y but bookings in Nov'16 fell drastically. But so far in Dec'16 the bookings are 7% higher than last year. With major Indian steel maker s further planning to ramp up their capacities, India s crude steel output is likely to strengthen further in the forthcoming year. Domestic steel demand weakened by currency demonetization has compelled Indian steel makers to explore export options. Flat Steel exports from India are likely to grow by 30-35% Y-o-Y in 2017. With imposed trade barriers and protectionist measure in place, Flat Steel imports to India has come down gradually. We anticipate imports to come down further however imports of special steel may continue. We expect Indian government will make provisional anti-dumping duty on HRC and HR plates permanent and it is expected that it may also further raise the limit of Non-Injurious Price (NIP) which is presently at 474/MT for HRC and 557/MT for HR plates.
REPORT BY Nishtha Mukerjee (Analyst) Pratibha Bajaj (Research Associate) RAIPUR #301, Jeevan Parisar, Rajeev Nagar Behind Crystal Arcade Raipur - 492 007 (C.G) India Tel: +91 9575100530 KOLKATA th 5 Floor, Vishvakarma Building, 86, TopsiaRoad, South-West Block Kolkata - 700 046 (W.B) India Tel: +91 33 22852063 Email: info@steelmint.com Web: www.steelmint.com