Page 1 Steel Update - May 2021 J. M. Baxi & Company
MONTHLY REPORT STEEL MAY 2021 Page 2 Steel Update - May 2021 J. M. Baxi & Company TABLE OF CONTENT
PORT ANALYSIS
STEEL TRAFFIC AT INDIAN PORTS (QTY IN MILLION TONNES) 3
COUNTRY-WISE STEEL IMPORTS TO INDIA APR - 21 (QTY IN MILLION TONNES) 4
COUNTRY-WISE STEEL EXPORTS FROM INDIA APR - 21 (QTY IN MT) 4
MAJOR STEEL IMPORTERS APR - 21 (QTY IN MT) 5
MAJOR STEEL EXPORTERS (QTY IN MILLION TONNES) 6
MARKET OVERVIEW AND TRENDS
Essar Steel chosen to develop Kadapa steel plant 7
Steel companies hike prices by 4,500 a tonne, amid weak demand 8
Export space is expanding for India’s steel industry but domestic factors could 9 play a spoilsport
Steel industry hoping for steady growth in 2021 11 Page 3 Steel Update - May 2021 J. M. Baxi & Company
PORT ANALYSIS STEEL TRAFFIC AT INDIAN PORTS (Qty in Million Tonnes)
PORT APR- MAR 2020-21 APR- MAR 2019-20 VARIANCE
ANGRE 12194 -12194
CHENNAI 1853903 1730845 123058
COCHIN 8143 19755 -11612
DAHEJ 170528 162464 8064
DIGHI 13000 -13000
DHAMRA 1194348 964584 229765
ENNORE 240607 121686 118921
GANGAVARAM 1539178 491062 1048116
HALDIA 1416438 761969 654469
HAZIRA 679834 183608 496227
KAKINADA 4919 39148 -34229
KANDLA 1193247 979907 213340
KARAIKAL 111288 0 111288
KATTUPALLI 44373 32450 11923
KOLKATA 69541 31404 38137
KRISHNAPATNAM 362456 17750 344706
MAGDALLA 136600 462752 -326152
MANGALORE 310266 135613 174653
MAYABUNDER 428 0 428
MORMUGAO 1664439 1159683 504756
MUMBAI 1786366 2726053 -939687
MUNDRA 978161 1355848 -377687
PARADIP 3005568 1727232 1278336
PORT BLAIR 1000 0 1000
REVDANDA 25709 0 25709
TUTICORIN 2398 6529 -4131
VISAKHAPATNAM 1296365 130111 1166254
GRAND TOTAL 18096104 13265648 4830457 Page 4 Steel Update - May 2021 J. M. Baxi & Company
COUNTRY-WISE STEEL IMPORTS TO INDIA APR - 21 (QTY IN MILLION TONNES)
(QTY IN METRIC COUNTRY TONNES) CHINA 8389 JAPAN 49283 SAUDI ARABIA 69 SOUTH KOREA 56269 TAIWAN 12900 VIETNAM 10659 ITALY 0
COUNTRY-WISE STEEL EXPORTS FROM INDIA - APR - 21 (QTY IN MT)
(QTY IN METRIC COUNTRY TONNES) AUSTRALIA 4500 BELGIUM 5029 CANADA 15000 CHINA 205519 HONG KONG 29500 ITALY 37315 KENYA 8000 MALAYSIA 20000 PAKISTAN 4936 POLAND 3794 SINGAPORE 66675 SOUTH AFRICA 5000 SPAIN 4960 THAILAND 30000 TURKEY 15000 U.A.E. 4503 Page 5 Steel Update - May 2021 J. M. Baxi & Company
MAJOR STEEL IMPORTERS APR - 21 (QTY IN MT)
(QTY IN METRIC IMPORTER TONNES) ESSAR STEEL INDIA LTD. 23969
JINDAL SAW LTD. 15397
ARCELOR MITTAL NIPPON STEEL INDIA LTD. 14304
CHINA STEEL CORPN. INDIA PVT. LTD. 12900
HINDALCO INDUSTRIES LTD. 8020
JAI HIND TRADERS 5609
METAL ONE CORPN. INDIA PVT. LTD. 5210
GEORGE & CO. 5050
MANAKSIA LTD. 4846
MAHINDRA INTRATRADE LTD. 3190
NIPPON STEEL INDIA PVT. LTD. 2294
TOSHIBA TRANSMISSION 2042
SATYAM AUTO COMPONENTS LTD. 1742
EVEREST KANTO CYLINDER LTD. 1499
NAVNIDHI STEEL AND ENGG. CO. PVT. LTD. 1457 Page 6 Steel Update - May 2021 J. M. Baxi & Company
MAJOR STEEL EXPORTERS APR - 21 (QTY IN MILLION TONNES)
(QTY IN METRIC EXPORTER TONNES) JINDAL STEEL AND POWER LTD. 130000
RASHTRIYA ISPAT NIGAM LTD. 120000
JINDAL STEEL WORKS LTD. 107653
STEEL AUTHORITY OF INDIA LTD. 71602
TATA STEEL BSL LTD. 55000
JSW STEEL LTD. 50500
ARCELORMITTAL NIPPON STEEL INDIA LTD. 50000
TATA STEEL LTD. 47616
BHUSHAN POWER AND STEEL LTD. 47000
JINDAL STEEL PVT. LTD. 46100
VEDANTA ALUMINIUM LTD. 30000
JSW ISPAT STEEL LTD. 10000
WELSPUN CORPN. LTD. 9436
JSW STEEL COATED PRODUCT LTD. 8795
ASIAN COLOUR COATED ISPAT LTD. 5185
POSCO MAHARASHTRA STEEL PVT. LTD. 5029
ARCELOR MITTAL NIPPON STEEL INDIA LTD. 4961
JINDAL SAW LTD. 4503
FAIRMAX SHIPPING TRANSPORT SER. 400 Page 7 Steel Update - May 2021 J. M. Baxi & Company
ESSAR STEEL CHOSEN TO DEVELOP KADAPA The ₹11,000-crore project will generate STEEL PLANT over 25,000 jobs directly and indirectly The Andhra Pradesh Government has selected Essar Steel as a partner for development of the proposed 3 million tonnes per annum high grade steel Kadapa greenfield plant. The State Cabinet chaired by YS Jagan Mohan Reddy today decided to mandate Essar Steel to develop the steel plant on the basis of recommendations made by SBICAP. This means the earlier selection of Liberty Steel India as joint venture partner will be cancelled. The State government has already signed up with the iron ore mining major NMDC Limited for supplying about 4.5 million tonnes of ore per annumm. The project with a total outlay of about ₹11,000 crore will generate over 25,000 jobs directly and indirectly. The State has already made necessary arrangement for land for the Special Purpose Vehicle YSR Steel Corporation. In January bids of Essar Steel Limited, Liberty Steel Limited and Nalwa Steel Limited were filed and the bid of the Liberty Steel was selected. However, due to developments regarding Liberty Steel, the State government mandated SBICAP to reconsider the bids and Essar Steel was selected as the joint venture partner. During the Cabinet meet, the State Government has also approved funding of ₹1,448 crore for development of infrastructure at the Krishnapatnam Port industrial corridor connecting Chennai and the development of a eight-lane highway from Kailasagiri near Vizag to connect the greenfield airport proposed at Bhogapuram. The Cabinet also approved other key decisions including crediting ₹4,050 crore support for farmers.
Source: The Hindu Business Line Page 8 Steel Update - May 2021 J. M. Baxi & Company
STEEL COMPANIES HIKEPRICES BY 4,500
A TONNE, AMID WEAK Lockdowns across States impact DEMAND industrial activity Steel companies have hiked hot rolled coil prices by ₹4,000 a tonne to ₹67,000 in May due to sharp increase in cost of production, amid the second wave of Covid-19 pandemic ravaging the economic activity. Similarly, cold rolled product prices was marked up by ₹4,500 a tonne to ₹80,000 even as demand which revived sharply plateaued in the last two months due to various restrictions imposed by State governments to control the pandemic. Despite the hike, steel prices in India are at a discount of ₹8,000 a tonne to the landed cost of imports. Steel export from China are prices at $967 a tonne (free on board) while in Europe, it is $1,161 a tonne and in US, it is $1,410 a tonne. Steel companies may go for another price hike of ₹2,000-4,000 a tonne by mid-May or early June, sources said. Many of steel using industries have decried sharp hike in domestic steel prices impacting infrastructure projects. In fact, the Competition Commission of India has launched investigation to probe whether the steel companies are forming cartel to hike price. Though realisations in domestic are higher than exports, the steel companies ramp up exports when demand in the domestic markets plunge.
Other cost pressure Apart from coking coal and iron ore prices, the freight cost are also going up for steel companies. Many iron ore and coking coal mines in Australia and Brazil have shut production due to the pandemic. This has impacted the supply across the globe. China has started tapping in other countries for importing coking coal and iron ore after restricting imports from Australia. The move has pushed up prices shipped in from other countries. Moreover, China has shut down small pollutant steel plants as part of decarbonisation, cutting down steel supply and pushing up prices.
Source: The Hindu Business Line Page 9 Steel Update - May 2021 J. M. Baxi & Company
EXPORT SPACE IS EXPANDINGFOR INDIA’S Indian steel manufacturers have a strong export cycle ahead of STEEL INDUSTRY BUT them. At the same time, declining DOMESTICFACTORS domestic demand and the COVID-19 situation have emerged COULD PLAY A SPOILS as major concerns for them. PORT In April 2021, Chinese steel exports remained strong for the second month in a row, the highest since December 2016. With 26% YoY growth, China exported 7.97mt steel in April. However, it was mainly on account of exporters rushing to avail the benefit of available rebates. In the meantime, China’s steel imports have also continued to rise. It is an indication of strong domestic demand in China. Over January - April 2021, China’s steel imports have jumped 17% YoY to 4.9mt. However, this trend is highly unsustainable as China’s new steel policy is set to impact the dynamics of the industry. China has withdrawn several export incentives in order to support the domestic industry. The exports are expected to come down significantly under the impact of it. These new curbs will also decrease China’s steel import as the majority of domestic production will have to find domestic buyers. Changing dynamics in China perfectly suits the Indian steel mills. Domestic steelmakers should be eyeing to fill the spot that China vacated in the international market. Gaining a strong foothold in the export market is also a necessity for Indian steel makers to counter the weakness in the domestic market. Amid the rising COVID-19 cases and slowdown in economic activities, domestic steel demand declined ~25% MoM in April. Due to the weak demand, India’s crude steel production also declined 21% MoM in April 2021. India’s steel imports declined 27% MoM. Further indicating weakness in the domestic demand. Despite that, regional HRC steel prices have continued to rise due to the lack of supply. Declining Domestic Demand is a Worry Exports are holding up well and set to inch up even further. Page 10 Steel Update - May 2021 J. M. Baxi & Company
However, domestic steel consumption declined due to the slowdown in economic activities. While the steel market would want to make up for soft domestic sentiments by increasing exports, the production is suffering due to the lack of oxygen supply. The government has currently restricted the supply of oxygen for industrial activities and diverted the stock of liquid oxygen for medical purposes only. The steel ministry had recently informed that oxygen stocks at steel plants have reduced to just half a day from 3½ days earlier, with the majority of stock diverted towards medical use. Oxygen is crucial for steel plants, primarily in blast furnaces and other processes like lancing and gas cutting. The shortage of oxygen supply has badly impacted steel production. And the industry could very well miss out on fulfilling the space that China has vacated.
Source: Free Press Journal Page 11 Steel Update - May 2021 J. M. Baxi & Company
STEEL INDUSTRY It is interesting to note that developed countries, HOPING where steel consumption was set to reach a near plateau level, would together demand 8.2% FOR STEADY more steel in 2021, while emerging economies GROWTH excluding China is likely to clock a growth of IN 2021 10.2% in steel demand. The catastrophic year 2020 after creating one of the greatest challenges of the century came to an end reversing the hopelessness with lots of positivity. The feel-good period, however, appears short-lived as the second wave of the pandemic is ravaging some parts of the country and threatens to spread at a supersonic speed the remaining states of the country. Speed in vaccination covering the vulnerable sections, while maintaining all possible mandatory precautions against the disease remains the only solution left to fight the menace. Events that would take shape in the next fortnight would only tell if 2021 would be a better year than 2020. The Indian steel industry like its global counterparts belongs to one of those core industries that along with cement, renewable energy, coal and petro-chemicals is looking forward for a steady growth in 2021 onwards. In this context, the short range outlook for steel by WSA indicates a 6.1% growth of global steel demand at 1,874 MT, with china topping the list as usual with a predicted level of 1024.9 MT of steel consumption (54.6% share of global demand), at 3.0% growth over 2020, followed by India clocking growth at 19.8% of steel consumption at 106.1 MT in 2021. The US is slated to consume about 86.5 MT of steel with a growth rate of 8.1%. All other major steel producing countries have been projected to consume more steel in 2021. Japan with 56.0 MT, South Korea with 51.5 MT, Russia with 43.8 MT, Germany with 34.0 MT and Turkey with 35.0 MT are some of the top-ranking steel consuming countries. It is interesting to note that developed countries, where steel consumption was set to reach a near plateau level, would together demand 8.2% more steel in 2021, while emerging economies excluding China is likely to clock a growth of 10.2% in steel demand. The CIS, Central and South America and Africa would have a comparatively slower growth of 6.8%. Page 12 Steel Update - May 2021 J. M. Baxi & Company
The traditional demand driving sector for steel continues to be construction, which with the help of real estate construction and infra stimulus that have been announced by almost all the countries to prop up their economies immediately after the pandemic, would play a stellar role in strengthening steel demand. The demand for logistic- related facilities to support e-commerce, along with green recovery programmes and infra renewals, would play their part. In India, the transportation of clean drinking water to cover each household in the country, LPG gas supply through pipes and transportation of oil and gas have been identified as key action areas. The automobile sector that accounts for a much larger share in steel consumption in the US, the EU, Japan and South Korea (22-25% against 9% in India), is poised for a growth after sliding down in last three years. The Covid 19 pandemic has brought about a thrust on owning personal vehicles as opposed to public transport. Shortage of semiconductors may pose a risk in supply chain management. Passenger cars, light and medium commercial vehicles and tractors are selling at a high rate in India to reflect rising rural income and demand. A number of mega government schemes in India like Jal Jiban Mission, PMAY-G & U, Bharatmala and Sagarmala provide good prospect for public investment, while projects like dedicated freight corridor, Metro railways, Ujala, port modernisation, new airports, renewable energy and irrigation projects would demand massive volume of steel that can be mostly supplied indigenously. The indian steel industry needs to enhance intensity in each of these segments by making available standard designs in steel that can be immediately implemented. The penchant for Atmanirbhar Bharat and renewable energy would lead to higher demand for indigenous manufacturing of steel contained engineering goods by replacing imports. Steel exports by India reached a record level of 17.4 MT in FY21 (including 6.6 MT of semis) which exceeds last year’s level by as high as 55.5%. Vietnam has received maximum Indian steel exports, followed by China (semis export), Italy, the UAE and Nepal. India has become a net exporter by a big margin as total steel imports at 5.04 MT is 29.6% lower compared to last year. India has imported maximum from South Korea, China, Japan and Taiwan. Large volume of HRC imports from South Korea was undertaken to feed the Korean service sectors’ demand. These imports are expected to be replaced by domestic supply. Total imports valued at Rs 63,038.9 crore in FY21 was much lower compared to the export proceeds (all items inclusive) earned by the country at Rs 91,545.5 crore.
Source: Financial Express Page 13 Steel Update - May 2021 J. M. Baxi & Company
REPORTS FOR MAY 2021
J. M. Baxi & Co. Monthly Agri Products Update
J. M. Baxi & Co. Monthly Automotive Logistics Update
J. M. Baxi & Co. Monthly Cement Update
J. M. Baxi & Co. Monthly Chemical Update
J. M. Baxi & Co. Monthly Coal Update
J. M. Baxi & Co. Monthly Container Update
J. M. Baxi & Co. Monthly Cruise Shipping Update
J. M. Baxi & Co. Monthly Edible Oil and Extractions Update
J. M. Baxi & Co. Monthly Fertilizer Update
J. M. Baxi & Co. Monthly LPG & LNG Update
J. M. Baxi & Co. Monthly Mineral and Metal Update
J. M. Baxi & Co. Monthly Oil and Petroleum Update
J. M. Baxi & Co. Monthly Port Update
J. M. Baxi & Co. Monthly Project Cargo Update
J. M. Baxi & Co. Monthly Seafarer Insights Update
J. M. Baxi & Co. Monthly Steel Update Page 14 Steel Update - May 2021 J. M. Baxi & Company Research Cell, Contact Details:
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