Steel is fixed in India

Russia continues to explore the Indian steel market. In November, Russian companies provided more than 10% of Indian imports, becoming one of the largest suppliers to the market, where they had almost no presence before sanctions and the European embargo. In general, the weakening of the ruble and the growth of world prices contribute to the increase in steel exports, and, according to analysts, Russian metallurgical companies have already fully contracted shipments in January.

Russia is increasing the supply of finished steel to India. In November, Russian metallurgical companies shipped 62.7 thousand tons of hot-rolled coil to this country at a time when India’s total steel imports hit a maximum since October 2019 at 600.3 thousand tons last month, Argus reports, citing data from the Ministry of Steel. India. In total, in April-November, Russian companies shipped 158 thousand tons of hot-rolled steel to India, while before the start of the conflict in Ukraine, such deliveries were practically not carried out.

In November, against the backdrop of a shortage of coal and high prices for coking grades, India retains the status of a net importer of steel for the second month in a row. Imports of finished steel from April to November increased by 23% compared to the same period last year, to 3.75 million tons.

Russian companies are forced to look for new markets after the closure of the European market for the main types of steel products from the Russian Federation. Before the sanctions, more than 40% of steel production in Russia was exported. The most active in the Indian direction is Severstal, which is included in the US SDN list and is under European sanctions. The first batch of 24 thousand tons of Russian steel arrived at the port of Mumbai at the end of July, Kallanish commodities noted. According to sources of the publication, the contract was concluded either in Emirati dirhams or in yuan. “I think companies are now looking for all the ways to increase such volumes, and I’m sure there is additional potential there. Especially given the rise in steel prices and the devaluation of the ruble,” says Kirill Chuiko from BCS.

The rating agency ICRA, in turn, notes that steel exports to India will grow steadily amid limited growth opportunities in key global steel production centers: Japan, South Korea, Russia and China can maintain large volumes of supplies to India in 2023-2024 fiscal years.

Over the past two months, steel exports from Russia have been supported by the accelerated weakening of the ruble. The increase in demand for Russian flat steel was noted by the consulting agency MMI in its December review. Manufacturers almost completely contracted production in January, consumers began to more actively conclude contracts for the supply in February. Despite the negative sentiment on the steel market as a whole, there is a trend towards an increase in the supply of coils for export, the review says.

India has become the largest new market for traditional Russian exports since the imposition of sanctions. This is explained by the fact that the transport distance for deliveries to India from the ports of the North-West and South of the Russian Federation is much less than to China. In addition, Kommersant’s sources say that finding new partners in India is faster and easier than in China. Thus, in November and December, India became the main importer of marine shipments of Russian oil, overtaking China. The growth of the Urals discount against Brent significantly increases the margins of Indian refineries, which are increasingly exporting petroleum products, including to Europe, which is preparing to refuse the supply of petroleum products from Russia from February 5, 2023.

Evgeny Zainullin