Mumbai, May 7 : Withdrawal of export rebates by China augurs well for Indian steel exporters and will also support buoyancy in international steel prices, ratings agency ICRA said on Friday. China's steel exports have been on an uptrend in the current year and grew sharply by 24 per cent YoY in Q1 CY2021, partly aided by a lower base and improving demand from other geographies. Another key reason behind the export growth momentum was market expectations of a cut in export rebates by the Chinese government to rein in steel production, a move aligned to meet its long-term carbon neutrality targets. On April 28, China announced the removal of export rebates on 126 steel products, including hot-rolled coils, and also cut the import duty on crude steel, pig iron and scrap to zero with effect from May 1. According to ICRA, this action is likely to slow down the pace of Chinese steel exports in the near term and in turn, benefit Indian steel mills. In CY2020, when other key steel-producing countries reported a contraction in steel output, China's crude steel production reported a healthy growth of 5.2 per cent in CY2020 on the back of its resilient property market. In Q1 CY2021, it further grew by 15.6 per cent due to a low base, which also kept its exports much higher this year compared to Q1 CY2020. As per the World Steel Association's demand forecast in April 2021, China's steel consumption is expected to grow by 3 per cent in CY2021 and the country already clocked 15.2 per cent consumption growth in Q1 CY2021. "Given the strong demand, export rebate cuts, the Chinese government's intent to keep steel capacities under check and stricter production curbs imposed in the Tangshan region (which accounted for about 14 per cent of China's crude steel production in CY2020), China may not have excess steel volumes to divert to export markets. As a result, international steel prices are expected to remain buoyant in the near term, which in turn would support India's steel prices," said Jayanta Roy, Senior Vice-President & Group Head, Corporate Sector Ratings, ICRA. As against domestic HRC prices in China of close to $900/MT in end-April 2021, its export HRC prices stood at $915/MT. Without the export rebates of 13 per cent, there would not be any major incentive for Chinese steel mills to export in large quantities at these prices. While India's export HRC prices as on May 1, 2021 were trading higher than Chinese export HRC prices at $950/MT, Indian steel exporters are earning better realisations in the export markets than close to $900/MT earned in the domestic markets. In the current scenario of a moderation in demand in India due to the second wave of Covid-19 and consequent business lockdowns, Indian steel mills would be able to offload large steel volumes to export markets and still remain highly profitable, according to ICRA. Taking a look at the product-wise growth pattern of domestic steelmakers, as per the Joint Plant Committee data, long products reported a lower contraction of 1.4 per cent in FY2021 compared to 10.9 per cent contraction reported in the flat product category. "While long steel products would continue to dominate India's consumption growth story going forward, a favourable international market environment for export of flat products amidst domestic demand slowdown augurs well for Indian steelmakers in the near term," Roy contended. /IANS