Contrary to political rhetoric and shrill nationalistic slogans demanding India cut down its trade dealings with China post Galwan clashes, India’s steel exports more than doubled between April and July to hit their highest level in at least six years, data analyzed by Reuters shows.
The exports were boosted by a surge of Chinese buying in the face of tensions between the two countries.
Traders said reduced prices had driven the purchases as Indian sellers sought to get rid of a surplus generated by the impact of COVID-19 on domestic demand and generate much-needed income.
It was unclear whether the sales broke any trade rules, but the China Iron and Steel Association said in a statement it was monitoring them.
Leading Indian steel companies Tata Steel Ltd and JSW Steel Ltd were among Indian companies that sold a total of 4.64 million tonnes of finished and semi-finished steel products on the world market between April and July.
That compared with 1.93 million tonnes shipped in the same period a year earlier, as per the government data.
Of the 4.64 million tonnes, Vietnam and China bought 1.37 and 1.3 million tonnes of steel respectively. The Chinese purchases are by far the largest since data was first collated in the current form beginning with the fiscal year April 2015-March 2016.
Vietnam has been a regular buyer of Indian steel, but China’s emergence as a leading buyer, replacing New Delhi’s traditional markets, such as Italy and Belgium, is more surprising.
Although China, the world’s leading steelmaker produces vast quantities, it needs imports as it ramps up infrastructure spending.
Reuters quoted two industry sources who said major Indian steelmakers offered a discount of at least $50 a tonne, selling hot-rolled coils and billets to China at $430-$450 per tonne against the $500 offered by most Chinese producers.
A report said India’s imports from China have risen to $5.6 billion in July, rising for the second straight month, although imports are still down by 24% from 2019.
India’s imports from China, its largest trading partner in goods, had fallen to a record low of $3.2 billion both in the months of April and May, coinciding with India’s lockdown on account of the pandemic.
And rating agency Crisil said in its recent analysis that India’s exports to China and Malaysia surged by more than 70 per cent in June, even as those to the US and the UK contracted in the same period.
Weak domestic demand and rising restrictions have also meant that imports by India have been muted, helping reduce the trade deficit with China, the report states. According to government data, India’s trade deficit with China has halved to $1.2 billion in June, from $2.4 billion in May.