India’s steel mills are rushing to fill a supply gap created by Russia’s invasion of Ukraine, as consumers from Europe to Africa turn to the world’s second-largest producer.
Russia’s invasion of Ukraine has jeopardized steel supplies from both the major producing nations, straining an already tight market in Europe and sending prices soaring. It’s also pushed companies from Europe, the Middle East and Africa to reach out to Indian producers even as steel prices have jumped 20 percent in the last one month, according to Jindal Steel & Power Ltd.
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“There is a shortage of steel in Europe and the Middle East and Africa region and that supply will be bridged partly by India and partly by China,” V.R. Sharma, managing director of the Indian steelmaker said in an interview.
“We are seeing good orders from these places in the last week or so, with some buyers asking for immediate delivery for shipment in March and April.”
Almost a third of India’s steel and iron ore exports were headed for Europe last year, trade data showed. That number is set to increase in the short term as sanctions limit Russia’s ability to supply goods to Europe and a number of mills in Ukraine – including ArcelorMittal SA and Metinvest Holding LLC – are forced to idle their plants due to the war.
Jindal executed orders for plates and hot-rolled coils to the region at $1,200 to $1,300 a ton and long products at $1,000 to $1,100, he said. Prices have jumped in the last month because there isn’t enough steel and raw material costs, specially that of coking coal, have surged, he added.
“European exports will be extremely lucrative till the time inflation starts pulling down industrial demand in the region,” Abhijit Mitra, an analyst at brokerage ICICI Securities Ltd., said in a note.
“The initial excitement on higher export realizations can’t last beyond 2-3 quarters.”
India’s potential to export more steel remains limited despite shipping to global markets being almost $250 a ton more lucrative as local demand is booming and mills are already running at peak capacity, limiting their ability to scale up for overseas orders, Sharma said.
The country also faces challenges in transporting goods from the mills to the ports due to a paucity of trains and shipping vessels. That will cap additional exports at 2.5 million tons this financial year, he said.
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