Though Russia has been diverting distress steel cargo at a huge discount to India of late, it could not make deeper inroads due to multiple challenges, including settlement of payment and procuring insurance for the shipments.
Of the overall 3.73 million tonne of steel imported to India between April and November, Russia exported only 2.20 lakh tonne, accounting for just six per cent of the overall imports, according to data sourced from ICRA.
Russia started tapping the Indian market after its traditional markets in Europe imposed economic sanction on it post the war on Ukraine, said a steel company official.
Moreover, he added that the demand in China — alternative export destination of Russia — faced huge economic turbulence with its zero Covid policy. Amid the problem of plenty, Russia’s exports to India increased by about five times on a low base of 38,400 tonnes in first 8 months of FY22.
While imports from Russia may ease out after the Chinese economy bounces back, what is more worrying is the rising steel shipments from Korea, he added.
Korea steel exports to India increased 15 per cent in the first eight months of this fiscal to 1.49 mt against 1.29 mt logged in same period last fiscal.
Priyesh Ruparelia, Vice-President and Co-Group Head, Corporate Ratings, ICRA, said imports from Korea remain high as it has a free trade agreement with India that allows duty free imports of steel, and provides an arbitrage opportunity to importers against 7.5 per cent import duty levied on China.
On the other hand, Ruparelia added that Russia has started diverting steel volumes to alternative markets such as India and China, as Europe imposed sanctions on steel imports after the Ukraine war outbreak.
Most Korean automobile makers in India import steel from their own country as it works out 7.5 per cent cheaper than sourcing from India. The prices in India are benchmarked to landed cost of imports including the customs duty.
India is the only bright spot where the steel demand is still holding due to the government spending on infrastructure projects. An economic recession in most of the developed countries has forced steel exporting countries to tap the Indian markets.
Notwithstanding Covid challenges, China exports to India increased 70 per cent to 9 lakh tonne (5.3 lt) while that of Indonesia remained unchanged at 1.3 lt. However, Japan’s was down a tad at 4.5 lt (4.8 lt)
Overall, steel imports jumped 22 per cent between April and November to 3.73 mt against 3.06 mt logged in same period last year.
