India’s Jindal Stainless Ltd has cut its exports forecast for the fiscal year ending March due to freight disruptions in the Red Sea and faltering demand in Europe and the United States, a top executive said.
India’s biggest stainless steel manufacturer hopes to ship out 10-12% of its estimated overall sales of over 2.1 million metric tons in 2023/24, down from its previous forecast of 15%, Abhyuday Jindal, managing director of Jindal Stainless, told Reuters in an interview.
The company is exploring “new options” and a “variable freight model”, Jindal said, as part of efforts to deal with the challenges posed by attacks launched by the Iran-allied Houthi militia on ships in the Red Sea. He did not give details of the options being weighed by his company.
Under a variable freight model, the company could pass on changes in ocean freight charges to its customers.
Challenges such as cargo disruptions in the Red Sea, rising freight costs and weakening demand in Europe and the United States emerged in the third quarter of this fiscal year to March, Jindal said.
“On account of logistic challenges and higher freight charges, some of our export volumes have suffered,” he said.
Last year, the company said it would aim to boost shipments to large buyers such as Russia and enter new markets in South America and the Middle East.
Since the Middle East accounts for a small portion of sales, the impact of instability in the region was minimal, Jindal said.
Unlike Europe and the United States, India’s steel demand is buoyant due to a spurt in economic activity and a revamp of broader infrastructure.
Jindal said India’s robust domestic demand would help the company sell more locally, with sectors such as defence, aerospace, healthcare and renewable energy consuming a lot of stainless steel.
However, suppliers from China and Vietnam had increased dumping of some grades of stainless steel, and that affects domestic producers immensely, he said.
Reuters earlier reported that India’s finished steel imports from China touched a five-year high in the first eight months of the fiscal year that began in April, and the government was monitoring overseas shipments coming into the country.