Are Indian Primary Mills Focusing On Domestic Market Rather Than Export?

In the dynamic Steel industry landscape, primary mills are strategically shifting their focus towards the domestic market. This strategic move comes as exporting Steel faces challenges due to the heightened awareness of international buyers regarding market dynamics and global price fluctuations. With international buyers closely monitoring the market, primary mills are redirecting their efforts towards meeting the demands within the country.

Anticipating Demand Surge & Price Rise

Market experts anticipate a surge in demand and subsequent price hikes starting from the next month. The primary mills are gearing up to capitalize on this anticipated peak demand season, set to unfold in October 2023. The industry is aligning its strategies to ensure timely production and delivery to meet the projected heightened demand.

Primary Mill’s Price Revisions

In preparation for the expected demand surge, primary mills have revised their Steel offers for the latter half of September 2023. An impending increase in Steel prices by approximately Rs. 2,000-3,000/ton is expected by the end of this month. This price adjustment comes after a recent price increment of Rs. 500-1,000/ton, with SAIL leading the way with a Rs. 750/ton increase.

India’s domestic Steel demand remains moderately strong, buoyed by several factors. An election year is on the horizon, prompting a series of infrastructure projects and contributing to a positive outlook for the Steel market. Additionally, a slight recovery in automotive demand, evident from a 10% growth in auto sales in August, is further supporting the Steel demand.

Global Market Conditions’ Impact

Despite the domestic focus, the global Steel market conditions cannot be ignored. Indian Steel exports have dwindled to negligible volumes due to the subdued global sentiments. The European Union (EU) market is experiencing a slowdown as it enters a vacation mode, impacting procurement and trade.

Indian primary mills have adjusted their strategies, accordingly, refraining from extensive offers in the European market. The HRC export offers for EU (Indian Origin) currently stand at $687-692/ton CNF.

Competitive Global Arena

In the global market, Indian Steel faces stiff competition, notably from Chinese Steel. Chinese Steel offers a more competitive price compared to the higher Indian Steel prices, attracting buyers in regions like the Middle East. This has led to a decrease in exports from India to the Middle East, prompting a reevaluation of pricing strategies to remain competitive on the international stage.

The HRC export offers for Dubai (Indian Origin) currently stand at $617-622/ton CNF. Whereas, Chinese-origin material is hovering at $582-587/ton CNF UAE.

OFB’s Insight 

The Indian Steel industry is adapting and strategizing to navigate the evolving market dynamics, ensuring domestic market stability, especially considering the predicted sluggishness in exports. Indian exporters are bracing themselves for fierce competition from Chinese counterparts, who are anticipated to persistently export large quantities at highly competitive prices.