Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Tata Steel India plans to export around 30pc of its output in Q2FY2021, according to the company’s earnings call. In the first quarter of FY2020-21, the company exported around 50pc of its production to offset a slump in domestic demand. During the lockdown in April, exports were at 80pc. Historically, Tata Steel’s India division exports around 10-15pc of its annual production.


Products semis like billet and slabs were exported mainly to buyers in China. Tata Steel also sold hot-rolled coils to China. Usually, the company do not sell or export semis but, due to weak demand in the domestic market in April and May, the company diverted domestic sales to the export markets. Going forward, the company does not plan to export semis.


Globally, economic recovery is faster in China owing to investments in infrastructure and real estate, said the company’s CEO, TV Narendran in the earnings conference. China’s crude steel production also recorded an all-time high in May to 92.27mn mt, an increase of 4.2pc compare to the prior year. China imported steel around 1.28mn mt in the same month.


Apart from exporting to China, South East Asia is also a preferred market for Tata Steel’s exports. The company also sells to buyers in the Middle East and southern Europe. Flat products like hot-rolled coil and cold-rolled coil were exported to these countries. In the international market, steel prices rose by around $50/mt in the last 3-4 months. 


Domestic market

Steelmakers in India have pinned they hope on a demand revival in the rural market. The pandemic has severely impacted economic activity in urban areas while agri-income focused rural regions, which also have a lesser number of COVID-19 cases, are showing a recovery in demand. Government-funded infrastructural push in sectors such as oil and gas, railways and housing in rural areas is also supporting demand. However, steel consumption is expected to return gradually to pre-COVID-19 levels in Q3 or Q4FY2021 and by then steel export by large players will shrink. 


High inventory build-up at steel mills and low demand from end-use sectors such as real-estate developers have pressured semi-finished steel prices. On Thursday, the daily Davis Index for rebar settled at Rs30,900/mt ($413.1/mt) ex-works Raipur, down by Rs100/mt ($1.32/mt) from Wednesday. Primary steel producers offered rebar at around Rs37,000-37,500/mt ex-yard Mumbai, while secondary producers offers were at around Rs31,000-31,500/mt.

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