New Delhi: India’s exports of finished and semi-finished steel to China has risen sharply this financial year, spurred by the latter’s quick economic recovery from the Covid-19 pandemic, and despite the rising tensions between the neighbours in Ladakh.
India’s total iron and steel exports in the first five months of this fiscal to China were more than three times the figure in the entire financial year 2019-20.
Data from the Ministry of Commerce and Industry shows that the total iron and steel exports to China were worth $1.86 billion in April-August 2020, up from $514 million for all of 2019-20.
More than two-thirds of these exports were of hot-rolled products and semi-finished products of iron and non-alloy steel, the data showed.
India exported $889 million worth of semi-finished products of iron or non-alloy steel to China in the first five months of 2020-21, as against $107.24 million overall 2019-20. The exports of hot-rolled products of iron and non-alloy steel were at $637 million this year, as against just $23 million last year.
Also read: India’s steel demand bounces back at faster-than-expected rate
Surge in demand from China
Bhaskar Chatterjee, secretary-general of the Indian Steel Association, pointed out that around 60 per cent of the Indian steel exports were to countries like China and Vietnam.
“The reason for the increase in the steel demand by China and Vietnam is their faster recovery from the pandemic. The other reason for China is the series of stimulus packages, both monetary and fiscal, which also includes some sector-specific stimulus for the infrastructure and construction sector. Due to this stimulus, the steel demand and prices for steel products in China remained at an elevated level,” Chatterjee said in an email response.
Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations, added that China is consciously shifting more into value-added production in the manufacturing sector.
“It has also recovered faster from Covid compared to other countries, which is one of the reasons for the increased demand,” Sahai said.
Due to this surge in demand, China’s share in India’s total iron and steel exports has also surged to 35 per cent in April-August from 5.5 per cent in all of 2019-20.
This has meant that while relations between India and China have hit a new low thanks to the border standoff in Ladakh, China’s share in India’s export and import baskets has increased this fiscal. While China’s share in India’s overall exports increased to 9 per cent in the current fiscal from 5.3 per cent in 2019-20, on the imports side, the corresponding figures were 18 per cent and 13.7 per cent.
Also read: India’s iron ore exports rise to 8-year high on China’s 20 million-tonne purchase till June
India now exporting finished steel, not iron ore
In a 21 October report, Care Ratings had pointed out that the finished steel exports as a percentage of total finished steel production peaked during April-August 2020 — the figure was 21 per cent, compared to 8 per cent in April-August 2019, and 6 per cent in the same period in 2018.
The ratings agency said the Covid-induced lockdown in April-May had crippled domestic demand, and steel players were forced to look at export markets to keep their inventory in-check.
“Domestic steel companies ramped up export of steel products, especially semi-finished products, significantly during May and June 2020 due to fall in domestic demand and relatively better demand from China and other export destinations,” Care Ratings’ report said.
Chatterjee concurred that the lockdown and sluggish demand in the domestic market saw a marked change in the trade pattern.
“The total exports of finished steel products from India registered a significant increase. For the months of May, June and July, the country’s exports on an average increased more than 200 per cent when compared with the same period last year. In June 2020, the total exports touched 1.5 million tonnes, which is an increase of around 334 per cent over June 2019,” Chatterjee said.
However, he added: “Imports of finished steel products registered a significant decline. For the period April to August, the country’s imports decreased more than 51.7 per cent when compared with the same period last year.”
Sahai, meanwhile, said Indian companies are becoming competitive, and this is reflected in the gradual shift in India’s export basket from exporting raw materials to exporting finished products.
“This is visible not only in steel but also in cotton,” he said, adding that the shift in the steel sector started two years back.
Also read: India’s exports dip by 12.66%, imports by 26% in August, trade deficit at $6.77 billion
Aren’t we being fools? Probably, the steel supplied from India will be used for making weapons, armoured vehicles etc. India has not changed much from the days of East India Company, which took away our raw materials and supplied expensive but poor quality finished goods.
Looks like India is again exporting Iron ore under the general heading ” semi finished iron “.
If this is the case then we are back to square one.
India must refrain from exporting ore instead it should only export steel products to creat employment and promote our industry.