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India's steel exports soared to an 18-month peak, reaching 1.1 million tonnes (MT) in January 2024, driven by heightened demand from the European Union (EU) and favourable global prices, according to a report by a market intelligence firm.
The robust performance in exports was further buoyed by competitive domestic steel prices, contributing to the significant uptick in outbound shipments compared to 0.67 MT recorded in January 2023.
SteelMint attributed the surge in exports primarily to robust restocking demand from the European Union, which accounted for 67% of the total exports in January, marking the highest level in the past 18 months. Additionally, while India's hot rolled coil (HRC) price stood at ₹54,300 per tonne, the global rate was $710 per tonne (approximately ₹58,000), further enhancing the attractiveness of Indian steel in global markets.
However, the report also suggests that Indian steel exports might encounter some moderation or remain relatively stable in the near term due to the global trade slowdown triggered by the Chinese lunar holidays and the Tet festival in Vietnam.
Despite potential short-term fluctuations, India's steel exports continue to demonstrate resilience and competitiveness in international markets, driven by favourable pricing dynamics and robust demand from key regions like the European Union.
Impacts
Positive Economic Impact: Increased steel exports can contribute positively to India's economic indicators, such as trade balance and foreign exchange reserves. It reflects global demand for Indian steel products, contributing to economic growth.
- Profitability for Steel Industry: The surge in steel exports, driven by supportive global prices and demand from the European Union, can enhance the profitability of the Indian steel industry. This may lead to increased investments and expansion within the sector.
- Employment Opportunities: A thriving steel industry can create more job opportunities, both directly within the industry and indirectly in related sectors such as logistics, transportation, and manufacturing.
- Competitive Domestic Prices: The competitive domestic prices of steel suggest that the industry is able to balance domestic demand and exports. This could benefit domestic consumers and industries that rely on steel.
Considerations for Government and Industry
- Monitoring Global Trade Dynamics: Given the prediction of a possible fall in steel exports due to the global trade lull induced by the Chinese lunar holidays and Tet festival in Vietnam, it becomes crucial for the government and industry to closely monitor global trade dynamics. This includes being aware of international holidays and events that may impact demand.
- Supply Chain Resilience: The government and industry should focus on building a resilient supply chain to mitigate disruptions caused by global events. This involves diversifying export markets and ensuring a steady supply of raw materials for the steel industry.
- International Trade Relations: Strengthening trade relations with key partners, such as the European Union, will be important. Diplomatic efforts should be made to ensure a stable and supportive trade environment for Indian steel exports.
- Sustainable Practices: As the steel industry expands, there should be a focus on adopting sustainable and environmentally friendly practices. This includes efficient resource utilisation, waste management, and adherence to international standards.
- Addressing Challenges: The government should address any challenges that may arise, such as trade barriers, regulatory issues, or changes in global economic conditions. Proactive measures can help maintain the momentum of steel exports.
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