Will Indian Steel Exports Gain Momentum Amidst Chinese Export Issues?

In recent weeks, the global steel market has been abuzz with reports of China’s stringent measures against non-VAT exporters, particularly impacting the steel industry.

These developments have raised speculation about the potential implications on global trade dynamics, particularly for countries like India, which have been eyeing opportunities to strengthen their exports. The question arises – Can Indian exports gain momentum in the wake of Chinese export issues?

Chinese Customs Crackdown – Is it a Game Changer in Global Trade?

China’s recent warnings and crackdown on non-VAT exporters have sent ripples across the international steel market.

Reports of inspections at major Chinese ports, including Qingdao, Jingtang, and Tianjin, have highlighted the seriousness of the situation. Customs authorities are intensifying their scrutiny of non-VAT business, signalling a shift in China’s export policies.

The Potential Impact of the Crackdown on Steel Prices

One might expect these developments to result in a surge in offer prices from China, consequently benefiting other steel-producing nations. However, reality presents a different picture. Despite the crackdown, low prices from China persist, as exporters tread cautiously to avoid alarming buyers.

This apparent contradiction underscores the complexity of global trade dynamics and the challenges associated with predicting market behaviour.

Non-VAT Trading – A Popular Practice Under Scrutiny

Non-VAT trading has been a prevalent practice in the Steel (HRC) market, albeit in smaller volumes.

Some sellers, in fact, have extended this mode of trading to include long products such as rebars and wire rods.

The attractiveness of non-VAT trading lies in its flexibility and cost-effectiveness. However, with Chinese authorities targeting such transactions, exporters are grappling with uncertainty and potential disruptions in their operations.

India’s Opportunity – A Window of Potential Growth

Amidst this uncertainty, attention has turned to alternative steel-exporting nations, with India emerging as a potential beneficiary of the shifting trade dynamics.

With its flourishing steel industry and competitive export capabilities, India stands poised to capitalise on any disruptions to Chinese exports. As uncertainties loom over the reliability of Chinese supply, buyers may increasingly turn to India as a more stable source of steel.

For India’s recent efforts to enhance its steel production capacity and infrastructure have bolstered its position as a key player in the global steel market.

The Indian government’s initiatives to promote domestic manufacturing and exports have created a conducive environment for steel producers to expand their operations and capture a larger share of the international market.

A Look on Steel Exports – China Vs India

• Chinese Steel Exports

In 2023, Chinese steel exports surged by 36.2% to 90.3 million tons, marking the highest level since 2016, as per China Iron and Steel Association (CISA) data. 

While, in the Q1 2024 (Jan-Mar), Chinese exports reported a record high of nearly 26 million tons. This marks a 28% year-on-year increase.

This significant uptick underscores the resilience and competitiveness of China’s steel industry in global markets.

• Indian Steel Exports

In 2023, India’s steel exports were buoyed by substantial year-on-year growth in the European Union (EU). However, overall volumes dipped by 22% to approximately 8 million tons, down from around 10 million tons in 2022, primarily due to sharp declines in other key importing regions.

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