Exports saving grace for domestic companies battling muted steel demand
KOLKATA: For domestic companies battling muted steel demand at home, exports were a saving grace in the just concluded fiscal 2016-17. The likes of Tata Steel, Steel Authority of India Ltd (SAIL) and JSW Steel reported a three-fold jump in export volumes during the year, as India emerged as a net exporter of steel.
More significantly, in addition to pushing volumes on an expanded production base, an enriched product basket helped these companies enter key export markets.
JSW Steel, one of the largest private steel players which posted a 26 per cent rise in production volumes during the year to 15.8 mt, it is estimated to clock export volumes of over 22 per cent of sales in FY17. It exported some 2.37 million tonne in April-December 2016. “Our exports have a wide footprint across some 100 countries. We have developed export markets religiously since the 90s and try to maintain consistency and reliability in our export strategy,” Jayant Acharya, director (commercial & marketing) JSW Steel said.
The largest state run steel company SAIL saw its exports go up three times in FY17 over FY16 with volumes rising to 7.2 lakh tonne (lt) against 2.41lt in FY16. It exported to countries like Bangladesh, Indonesia, Malaysia, Nepal Sri Lanka, Taiwan, Thailand and also to more mature markets like Italy and South Korea. SAIL said it aims at exporting 10 per cent of its total production, doubling volumes in FY18 and consolidating its presence in South East Asia and Europe.
Tata Steel too posted a major jump in exports which accounted for 7 per cent of total sales volume to in FY17, against 2 per cent of sales in FY16. With the company reporting sales of 10.94 million tonne (mt) in FY17, the exports is estimated at 7.65 lt during the year. These went to key buyers in South East Asia, the Middle East, Bangladesh, Nepal and Sri Lanka.
“Indian steel exports are rebounding as steelmakers chase more attractive prices overseas, while largely fending off import competition in the minimum import price (MIP) regime,” a Platts report recently said. While final data for the whole year April-March FY17 is still being compiled, the trend indicates a 77.6 per cent jump in exports to 6.62 mt coincided with a 38.5 per cent drop in steel imports in April-Feb’17.
“It coincided with a strong growth in steel exports by domestic mills, supported by an improvement in the pricing scenario in international markets,”
Jayanta Roy, senior VP, Corporate Ratings, ICRA said.
What helped steelcos score on the export market was an enriched product offering. For instance, JSW moved up the value chain and delved got deeper into it. It sold high value items like galvanised, colour coated, galvalume, alloy steel bars and customized steel items for specific end use applications. “We moved for example, from Cold Rolled Cold Annealed (CRCA) into high tensile and higher grades of CRCA,” Acharya said.
Apart from billets, SAIL’s export basket too contained items like plates, slabs, hot rolled (HR) coils and stainless steel, a company official said. Bulk of Tata Steel’s exports in FY 17 were also in value-added products like HR coils. In the overall export basket, high value HR sheets, coils, cold-rolled coils and galvanized products saw volumes increase 4.7 per cent, 306 per cent, 97.3 per cent and 21.7 per cent, April-Feb’17 data from steel ministry’s Joint Plant Committee said.
More significantly, in addition to pushing volumes on an expanded production base, an enriched product basket helped these companies enter key export markets.
JSW Steel, one of the largest private steel players which posted a 26 per cent rise in production volumes during the year to 15.8 mt, it is estimated to clock export volumes of over 22 per cent of sales in FY17. It exported some 2.37 million tonne in April-December 2016. “Our exports have a wide footprint across some 100 countries. We have developed export markets religiously since the 90s and try to maintain consistency and reliability in our export strategy,” Jayant Acharya, director (commercial & marketing) JSW Steel said.
The largest state run steel company SAIL saw its exports go up three times in FY17 over FY16 with volumes rising to 7.2 lakh tonne (lt) against 2.41lt in FY16. It exported to countries like Bangladesh, Indonesia, Malaysia, Nepal Sri Lanka, Taiwan, Thailand and also to more mature markets like Italy and South Korea. SAIL said it aims at exporting 10 per cent of its total production, doubling volumes in FY18 and consolidating its presence in South East Asia and Europe.
Tata Steel too posted a major jump in exports which accounted for 7 per cent of total sales volume to in FY17, against 2 per cent of sales in FY16. With the company reporting sales of 10.94 million tonne (mt) in FY17, the exports is estimated at 7.65 lt during the year. These went to key buyers in South East Asia, the Middle East, Bangladesh, Nepal and Sri Lanka.
“Indian steel exports are rebounding as steelmakers chase more attractive prices overseas, while largely fending off import competition in the minimum import price (MIP) regime,” a Platts report recently said. While final data for the whole year April-March FY17 is still being compiled, the trend indicates a 77.6 per cent jump in exports to 6.62 mt coincided with a 38.5 per cent drop in steel imports in April-Feb’17.
“It coincided with a strong growth in steel exports by domestic mills, supported by an improvement in the pricing scenario in international markets,”
Jayanta Roy, senior VP, Corporate Ratings, ICRA said.
What helped steelcos score on the export market was an enriched product offering. For instance, JSW moved up the value chain and delved got deeper into it. It sold high value items like galvanised, colour coated, galvalume, alloy steel bars and customized steel items for specific end use applications. “We moved for example, from Cold Rolled Cold Annealed (CRCA) into high tensile and higher grades of CRCA,” Acharya said.
Apart from billets, SAIL’s export basket too contained items like plates, slabs, hot rolled (HR) coils and stainless steel, a company official said. Bulk of Tata Steel’s exports in FY 17 were also in value-added products like HR coils. In the overall export basket, high value HR sheets, coils, cold-rolled coils and galvanized products saw volumes increase 4.7 per cent, 306 per cent, 97.3 per cent and 21.7 per cent, April-Feb’17 data from steel ministry’s Joint Plant Committee said.
