How Was The India’s Steel Sector Perform In 2022?

In the calendar year (CY) 2022, there were ups and downs in the Indian steel market. The main causes of the zigzag price oscillations in the Indian steel market were changes in export duties, as well as the war in Russia and Ukraine.

Q1, CY 2022

For the Indian steel business, the Q1 (January to March) period is typically prosperous; these months are referred regarded as the industry’s favourable season. Additionally, because the fiscal year is coming to an end, large building projects are largely in full throttle, creating a massive demand for steel from these projects.

When comparing the price of March with that of January, the Indian Steel prices throughout this quarter have shown a dramatic increase of Rs 10,000–15,000 per tonne due to the bullish trends.

While, coking coal prices surged by about $200 per tonne in March againt January offers.

It was reported that the nation produced 31.9 million tonnes of crude steel. During Q1 CY22, the nation’s exports were roughly 3.9 million tonnes.

The epidemic, the Russia-Ukraine situation, and the prospects for export from India have all had a significant impact on global supply chains.

Q2, CY 2022

The domestic steel industry was impacted by declining global steel prices during the second quarter (Q2) (April to June) of the calendar year (CY) 2022 or the first quarter (Q1) of the fiscal year (FY) 2023, as well as the imposition of 15 percent export duties on a number of steel products, including 45 to 50 percent on exports of raw materials (Iron ore and Pellets).

This is expressed in terms of declines in India’s steel exports of nearly 26% quarter over quarter. Although it was anticipated that the export duty on steel goods would only be a temporary measure, it has hurt the Indian Steel Industry.

The Dometic buyers also grew negative while analysing export measures, which caused a measured offtake from domestic customers. Because of this, the price of domestic steel products plunges dramatically by Rs 8,000–15,000 per tonne in June 2022 compared to offers in March 2022.

In terms of enery cost – Coking coal, price went down by $210-220/t compared to offers during March 2022.

Q3, CY 2022

In Q3 (July to September) of CY 2022, the Indian steel market remained poor due to moderated domestic demand and constrained exports due to higher export duties and falling steel prices globally. Global steel demand was impacted by rising energy prices and liquidity issues.

While, coking coal prices decreased by $110–120 per tonne during the quarter, steel prices fluctuated between Rs 1,000–3,000 per tonne.

Steel production in the nation was only simply steady in this quarter, quarter over quarter, at over 30 million tonnes, while exports fell by 38 percent to about 1.8 million tonnes.

Overall, the quarter came to a slow close with the anticipation that the government would announce export duty-lowering steps to help the country’s steel industry.

Q4, CY 2022

The government has reduced the export tariff on steel products and other raw materials (Iron ore, Pellets) to zero with effect from November 19, 2022, six months after the levy’s imposition on May 21, 2022, suggesting that the quarter will be favourable for India’s demand for steel.

The elimination of the export tax on steel goods would increase domestic metal companies’ earnings and given them the opportunity to explore international markets.

With the resuming exports after long spam, domestic steel production is likely to strengthen along with margins. Steel exports could increase significantly, albeit this would mostly depend on changes in world prices.

Overall, prices increased by about Rs 3,000–5,000 per tonne after the third week of November 2022, when export tariffs were eliminated.

In addition to raising prices, the mills are experiencing inventory shortages due to increased exports and high domestic demand.

Outlook

The outlook for the Indian steel industry is positive for the first quarter of CY 2023, and there is hope that the country’s steel exports will pick up steam. There is also hope that strong domestic demand will be boosted by the end of the Indian fiscal year and strong demand from the construction sector during the favorable construction season. The consumption of steel in infrastructure and construction projects exceeds 50%.

Also Read:- Indian Steel Market Closes on a Positive Note During The Last Week of 2022