India's steel exports will likely fall in June on increasing domestic demand as commercial activities resume with the lifting of localised lockdowns imposed by different states to contain the spread of Covid-19, market participants told Argus. The country's steel exports are estimated to reach around 1mn t in June and about 750,000t in July, according to a Mumbai-based research analyst. Rising domestic demand in India and lower Chinese export offers, along with weakening demand in Asean countries, will likely lower exports in the coming months, he said. India's steel exports jumped by 30pc on the month to 1.24mn t in May, although they were down by 3pc from a year earlier, according to estimates by Mumbai-based ratings agency Care Ratings. Fifteen percent of India's total finished steel production was exported in May compared with 11pc the previous month, steel ministry data showed. India's total finished steel output stood at 7.8mn t in May, up by 41.8pc from 5.5mn t in May 2020 but lower by 13.3pc from 9mn t in May 2019.
Exports to Italy, Turkey, Spain, Hong Kong and Nepal have risen sharply in recent months because of a sharp rise in international steel prices, while domestic steel prices remain at a discount to global steel prices. The spread between the Argus Asean HRC cfr Vietnam price and domestic India HRC ex-Mumbai price narrowed to $21/t last week, compared with $85/t at the beginning of May. Exports from India increased during April-May as domestic demand slowed because of localised lockdowns imposed by a number of states to combat a second wave of Covid-19 cases in the country. Domestic demand is estimated to have dropped by 25pc from April to about 6.25mn t in May, according to the Mumbai-based analyst. But demand in May rose from 4.8mn t a year earlier when a nationwide lockdown stalled operations in steel-consuming sectors such as automobiles, construction and consumer durables, the analyst said. Domestic demand is expected to recover to an estimated 7.5mn t in June and 8.5mn t in July, with the gradual lifting of lockdowns and mobility restrictions, as well as improving vaccination coverage, the analyst added.