Global pig iron imports fall over 30% in Q1; What lies ahead?

Global pig iron imports fell to 2 million tonnes (mnt) in the first quarter (Q1) of calendar year 2023 (CY23) against 3 mnt in the same quarter last year, reveals SteelMint data. Y-o-y, this was a 33% fall.

Country-wise break-up

US imports fall amid subdued steel demand: Imports by the United States fell by a sharp 37% y-o-y to 0.92 mnt against 1.48 mnt seen in the same quarter in 2022. Subdued steel demand, and lower crude steel output led to the drop. As per worldsteel data, US crude steel production fell 4% y-o-y in Q1 to 19.40 mnt. March 2023 volumes too were y-o-y down 2.1% to 6.70 mnt.

"The strong post-pandemic rebound of the US economy has run its course with the Fed's steep interest rate hikes to tackle inflation," worldsteel said in its Short-Range Outlook released in April.

US' post-lockdown manufacturing rebound has also slowed down.

That apart, scrap imports were more feasible. In Q12023, these increased to 1.25 mnt against 1 mnt in Q12022.

Turkiye volumes drop amid quake: Turkiye's import volumes of pig iron in the quarter under review edged down 3% in Q1 to 0.33 mnt against 0.35 mnt in Q12022. The country was hit by a massive earthquake in early February which led to temporary closure of some mills, and jolted production for some time.

In fact, crude steel production plunged 21.5% y-o-y to 7.40 mnt in Q1. That apart, earlier, the market had been gripped by uncertainty, on account of power tariff hikes in the latter half of 2022. Lack of market clarity had continued into Q1. Mills received some respite only in March when the government lowered natural gas tariffs.

China's domestic pig iron production rises: China saw a substantial 56% decline in pig iron imports in the quarter under review. Volumes fell to 0.24 mnt from 0.54 mnt in Q12022. The trend emerged against the backdrop of higher domestic production of pig iron in China, at 297.63 mnt, up 6% y-o-y. This rise can be attributed to a 6.1% y-o-y increase in crude steel production in Q1 to 261.60 mnt.

Exports decline in CY22

Meanwhile, global pig iron trade fell 21% to 9.2 mnt in 2022 against 11.70 mnt seen in the preceding year, another key reason for the overall decline in global imports.

For instance, although Brazil, the largest exporter, saw volumes rising 6% in CY22 to 3.40 mnt, the rest of the exporters saw a drop. In Q1, exports inched up to 0.88 mnt.

Russia, the second-largest exporter, saw its volumes falling a steep 23% last year to 3 mnt in the face of the war-induced Western sanctions imposed upon it. This naturally hit exports.

Similarly, Ukraine, the third-largest pig iron exporter, saw volumes plunging 52% to 1.4 mnt, hemmed in by the Black Sea blockade, an economic weapon Russia used against the war-beleaguered country. Pig iron exports from Ukraine was recorded at 0.45 mint in Q1 CY'23.

India saw its volumes plunge 62% last year to a mere 0.5 mnt on better realisations in the domestic market. SteelMint's data reveals that steel-grade pig iron, ex-works Durgapur averaged INR 43,102/t in Q1 against INR 42,009/t in the preceding October-December quarter. Prices had fallen sharply in November-December, 2022 but considerably recouped in January this year.

Outlook

Among the top importers, United States' growth prospects in 2023-2024 are subdued, with a likely recession seen exerting pressure.

Turkiye's steel requirements are expected to grow, fuelled by the construction sector. But, China's demand is seen growing a nominal 2% in 2023 and flattening out next year.

On the supply front, volumes from Russia and Ukraine may continue to be under pressure because of the ongoing war.

Keeping these factors in mind, pig iron imports too may remain subdued in Q2.