Based on data released by the Indian Ministry of Health, on the 27th, India reported an increase of 323,144 confirmed cases of COVID-19, bringing the total to 17.64 million. Additionally, there was a rise of 2,771 deaths, with the total death toll reaching 197,894. With the outbreak of the pandemic in India, there may be new import opportunities for Chinese steel.
India has become one of China's major steel importers. In 2020, India's crude steel production reached 100 million tons, accounting for 5.5% of the global total. As one of the world's key steel-producing nations, India has a certain impact on the global steel market's supply and demand structure, particularly in regional sales markets. In recent years, India has gradually increased the quantity of steel exports to China, making it one of China's significant importers. Last year, due to the COVID-19 pandemic, there was a supply-demand imbalance. China imported a total of 20.23 million tons of steel, and 18.33 million tons of billets, with 10.3% of the billets and 16.3% of the billets coming from India. India has also become the third-largest importer and exporter of steel, after South Korea.
Under the carbon neutrality and peak carbon emissions goals, there is a prediction of tightened supply in China, making an increase in pig iron imports a win-win situation. By 2020, in the backdrop of carbon neutrality and peak carbon emissions, regions like Tangshan and Handan in China had entered a reduced production常态. However, the quarterly output of crude steel in China exceeded 270 million tons, a year-on-year increase of 15.6%. With today's reduction in production, it seems unlikely to achieve the overall goal of reducing crude steel output year-on-year. Therefore, production scope may expand later on, and it is predicted that suppliers will have a strong tightening forecast. Moreover, China's consumption of crude steel reached 258.96 million tons, a year-on-year increase of 15.3%, and the 2020 departmental work summary report explicitly stated GDP growth of over 6%. This leads to a prediction of a 4% year-on-year increase in steel demand. In this situation, increasing imports of pig iron and other processed products not only fills China's copper element and transfers the cost pressure caused by iron ore, but also reasonably reduces China's carbon emissions, achieving a win-win situation.
Demand for steel is high overseas, and imports of steel into China have significantly declined. However, since the fourth quarter of last year, both China's talent and steel billet imports have notably decreased, primarily due to the continuous regeneration of demand in the global steel market, with prices significantly exceeding those in China. Although overseas crude steel production has reached current levels, the steel sales market in key economic countries remains in high demand. Due to the regeneration of the domestic automotive industry, India is gradually reducing its export market share of steel mills to prioritize foreign demand. Indian resources in the foreign market are nearly fading, and imports of steel and steel billets domestically are also gradually declining.
The outbreak of the COVID-19 pandemic in India has brought new opportunities for China's steel imports. India's crude steel production reached 29.62 million tons, a year-on-year increase of 10.4%. According to Mysteel's survey, the pandemic has had minimal impact on the production of local steel enterprises in India, but it will harm the downstream supply chain significantly, affecting vehicles and household appliances. If the situation mirrors last year and the pandemic persists without relief, the prices of Indian steel and billets may see a significant drop. Exporting to the Chinese market would be a reasonable approach to alleviate the pressure on China's steel supply and inventory management. From this perspective, China's imports of steel and billets from India are expected to sustain the high growth seen last year.
