From the detailed global steel trade data that have just been made available for 2013, a few interesting facts can engage our attention. Total steel trade reached nearly 390 mt, comprising of 188 mt of flats, 64 mt of long, 42 mt of tubes and the balance in semis. The export coverage ratio was 24.3% of crude steel production. This is around 7-9% lower than the average of the last few years.
Though for China exports constituted only 7.4% of domestic production, there are countries like Japan, South Korea, Ukraine, Russia and Turkey where the share ranged from 34-75%. This indicates demand stagnation and surplus capacity in these countries and the consequent urge to export to keep the mills running in their own countries, leading to declining trend in steel prices in the global market.
Further, the surplus steel in Japan is making the issue of technology transfer relating to high value-added flat products comparatively easy for Indian steel producers to set up these facilities in the country in collaboration with Japan.
It is well known that currently, regional blocks primarily based on geographical proximity indulge in a good deal of free steel trade within the bou-ndaries of the region. The total steel trade therefore includes internal trade of EU-27 of as high as 94 mt, 101 mt in Asia and around 30 mt in CIS, South America and NAFTA, and this total volume is generally not subject to anti-dumping investigations for lack of evidence on injury parameters.
While Chinese steel exports peaked at 57.8 mt followed by Japan at 42.1 mt, Indian exports have been shown as 9.3 mt, possibly by including exports of miscellaneous steel items.
It is interesting to note that around 64% of the total exports of 157 mt by Asia comprised of internal trade, including the tonnages under CEPA to India from Japan and South Korea that the Indian steel producers are cribbing about.
The US continued to retain number one position in steel imports (28.6 mt), way above China (14.4 mt). Over 46% of steel imports of NAFTA countries are sourced from Asia (South Korea, Japan, China, Taiwan, India and Vietnam) and this fact should be further strengthened in 2014. The net exporter club now consists of China, Japan, EU-27, South Korea, Ukraine, Russia, Turkey and Taiwan. India joins this group as a marginal net steel exporter. The net importer club belongs to the US, Thailand, Indonesia, Canada and Mexico.
To a large extent, one may conclude that demand potential exists in all net importing countries and there is a case for capacity expansion to substitu-te imports by these countries.
It is well known that China was the highest importer of iron ore at 819 mt in 2013 while maximising its domestic production of crude iron ore at 1.5 bt, with production of concentrates at 440 mt. Chinese imports were instrumental in maintaining an average price of the product with 62% Fe at $135/t cfr China in 2013.
Australia (613 mt) along with Brazil (330 mt), South Africa (63 mt) and Canada (38 mt) constituted 80.4% of the total seaborne trade of iron ore. Turkey became the highest importer of melting scrap (19.7 mt) followed by South Korea and India (5.6 mt) out of global import of more than 95 mt.
The broad trend of global trade in steel is likely to continue in almost the same fashion in 2014 unless perked up by a sudden spurt in demand which is likely to happen from Q3 onwards.
The author is DG, Institute of Steel Growth and Development. The views expressed are personal