Chinese buyers snap up Indian steel, defying trade tensions

A worker cuts steel bars for a construction project in the Indian city of Amritsar. (AFP)
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Updated 30 August 2020

Chinese buyers snap up Indian steel, defying trade tensions

  • New Delhi afterwards tightened rules to restrict Chinese investment in India and initiated measures to curb its trade with Beijing

NEW DELHI/BEIJING: India’s steel exports more than doubled between April and July to hit their highest level in at least 6 years, boosted by a surge of Chinese buying in defiance of tensions between Beijing and New Delhi.

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 and JSW Steel were among Indian companies that sold a total of 4.64 million tons of finished and semi-finished steel products on the world market between April and July.

That compared with 1.93 million tons shipped in the same period a year earlier, government data analyzed by Reuters showed.

Of the 4.64 million tons, Vietnam and China bought 1.37 and 1.3 million tons 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.

Neither Tata, JSW nor India’s federal ministries of steel and commerce responded to emails seeking comment.

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.

An already uneasy relationship between New Delhi and Beijing, became severely strained after violent border clashes in June.

New Delhi afterwards tightened rules to restrict Chinese investment in India and initiated measures to curb its trade with Beijing.

The politics are at odds with market realities.

Although China, the world’s leading steelmaker produces vast quantities, it needs imports as it ramps up infrastructure spending.

Two industry sources, asking not to be named because they are not authorized to talk to the media, said major Indian steelmakers offered a discount of at least $50 a ton, selling hot-rolled coils and billets to China at $430-$450 per ton against the $500 offered by most Chinese producers.

Hot-rolled coils, a flat steel product, are mostly used to make pipes, automobile parts, engineering and military equipment.

The China Iron and Steel Association official told Reuters it was paying particular attention to the imports of hot-rolled coils.

During the first four months of the 2020-21 fiscal year, China and Vietnam together bought close to 80 percent of India’s total hot-rolled coils exports, the data showed, while the product constituted more than 70 percent of India’s steel exports.

Ji Renjie, a general manager at China’s Ningbo Henghou Group said the company in May bought 30,000 tons of hot-rolled coils from India for July shipment and expected to take delivery of another cargo of a similar size in October.

“I mainly do iron ore trades and just bought several cargoes of hot-rolled coils this year due to rosy profit margins,” said Ji.

AM/NS India, the joint venture between ArcelorMittal and Nippon Steel, in an email also said China had been a big buyer, accounting for 35 percent of the approximately 0.5 million tons of hot-rolled coils it shipped between April and July.


China economy grows in 2020 as rebound from coronavirus gains

Updated 18 January 2021

China economy grows in 2020 as rebound from coronavirus gains

  • Growth in the three months ending in December rose to 6.5 percent over a year earlier
  • China’s quick recovery brought it closer to matching the US in economic output

BEIJING: China eked out 2.3 percent economic growth in 2020, likely becoming the only major economy to expand as shops and factories reopened relatively early from a shutdown to fight the coronavirus while the United States, Japan and Europe struggled with rising infections.
Growth in the three months ending in December rose to 6.5 percent over a year earlier as consumers returned to shopping malls, restaurants and cinemas, official data showed Monday. That was up from the previous quarter’s 4.9 percent and stronger than many forecasters expected.
In early 2020, activity contracted by 6.8 percent in the first quarter as the ruling Communist Party took the then-unprecedented step of shutting down most of its economy to fight the virus. The following quarter, China became the first major country to grow again with a 3.2 percent expansion after the party declared victory over the virus in March and allowed factories, shops and offices to reopen.
Restaurants are filling up while cinemas and retailers struggle to lure customers back. Crowds are thin at shopping malls, where guards check visitors for signs of the disease’s tell-tale fever.
Domestic tourism is reviving, though authorities have urged the public to stay home during the Lunar New Year holiday in February, normally the busiest travel season, in response to a spate of new infections in some Chinese cities.
Exports have been boosted by demand for Chinese-made masks and other medical goods.
The growing momentum “reflected improving private consumption expenditure as well as buoyant net exports,” said Rajiv Biswas of IHS Markit in a report. He said China is likely to be the only major economy to grow in 2020 while developed countries and most major emerging markets were in recession.
The economy “recovered steadily” and “living standards were ensured forcefully,” the National Bureau of Statistics said in a statement. It said the ruling party’s development goals were “accomplished better than expectation” but gave no details.
2020 was China’s weakest growth in decades and below 1990’s 3.9 percent following the crackdown on the Tiananmen Square pro-democracy movement, which led to China’s international isolation.
Despite growth for the year, “it is too early to conclude that this is a full recovery,” said Iris Pang of ING in a report. “External demand has not yet fully recovered. This is a big hurdle.”
Exporters and high-tech manufacturers face uncertainty about how President-elect Joseph Biden will handle conflicts with Beijing over trade, technology and security. His predecessor, Donald Trump, hurt exporters by hiking tariffs on Chinese goods and manufacturers including telecom equipment giant Huawei by imposing curbs on access to US components and technology.
“We expect the newly elected US government will continue most of the current policies on China, at least for the first quarter,” Pang said.
The International Monetary Fund and private sector forecasters expect economic growth to rise further this year to above 8 percent.
China’s quick recovery brought it closer to matching the United States in economic output.
Total activity in 2020 was 102 trillion yuan ($15.6 trillion), according to the government. That is about 75 percent the size of the $20.8 trillion forecast by the IMF for the US economy, which is expected to shrink by 4.3 percent from 2019. The IMF estimates China will be about 90 percent of the size of the US economy by 2025, though with more than four times as many people average income will be lower.
Exports rose 3.6 percent last year despite the tariff war with Washington. Exporters took market share from foreign competitors that still faced anti-virus restrictions.
Retail spending contracted by 3.9 percent over 2019 but gained 4.6 percent in December over a year earlier as demand revived. Consumer spending recovered to above the previous year’s levels in the quarter ending in September.
Online sales of consumer goods rose 14.8 percent as millions of families who were ordered to stay home shifted to buying groceries and clothing on the Internet.
Factory output rose 2.8 percent over 2019. Activity accelerated toward the end of the year. Production rose 7.3 percent in December.
Despite travel controls imposed for some areas after new cases flared this month most of the country is unaffected.
Still, the government’s appeal to the public to avoid traditional Lunar New Year gatherings and travel might dent spending on tourism, gifts and restaurants.
Other activity might increase, however, if farms, factories and traders keep operating over the holiday, said Chaoping Zhu of JP Morgan Asset Management in a report.
“Unusually high growth rates in this quarter are likely to be seen,” said Zhu.