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Bombay Chamber, Mumbai: The direct impact of the US tariffs on India’s steel sector sales volumes is expected to be minimal as India’s direct steel exports to the US accounted for only about 4% of its total steel exports in calendar year 2024 (CY24). However, there could be an indirect impact on realisations if major steel exporters to the US divert their supplies to India.
“The tariff hike by the US may lead to a substantial amount of surplus production being redirected to other countries, notably the Indian market, which is among the fastest-growing globally,” said Hitesh Avachat, associate director, CareEdge Ratings.
Global steel consumption is predicted to decline for the second year in a row in CY24, primarily due to decreased consumption from major developed nations such as the USA, Japan, and European regions. China, which represents nearly half of global steel production and demand, also saw a continued decline in domestic consumption. Despite this, the Chinese steel industry’s capacity utilisation rate remains robust at 80-85%, leading to significant surplus production, estimated at around 90-95 million tonnes (MnT) in CY24 – an increase from approximately 65 MnT previously in CY22, being exported.
India, on the other hand, has experienced strong steel demand growth, averaging around 10-13% over the past three fiscal years (FY22 to FY24). However, the global decline in demand has created an over-supply situation, pressuring steel realisations. Global steel prices have averaged around US$ 535 per tonne in CY24, down from US$ 788 per tonne in CY22, and have further declined in CY25 hovering around US$ 481 per tonne in January 2025.
“Over the past 3-4 quarters, the domestic steel industry has faced margin pressure owing to a significant decline in realisations, influenced by cheaper imports of steel products,” said Avachat adding that this trend may persist due to an increased steel surplus resulting from the recently imposed tariffs by the US.
CareEdge Ratings stated in its report that the US tariffs could result in the diversion of surplus steel production from major Asian steel manufacturers to the Indian market, likely affecting realisations.
During the first 10 months of FY25, the realisations of the domestic steel industry have already moderated with growing imports, making India a net importer of steel compared to a net exporter up to FY24. While overall volume of steel import into India is low compared to total domestic consumption, the realisations tend to mirror the landed cost parity with international prices.
Amid a subdued global environment, Avachat said, growth in Indian steel demand is expected to continue at a compound annual growth rate (CAGR) of around 8% over the next 2-3 years. The growth will be primarily driven by sustained momentum in end-user sectors such as infrastructure and construction.
While the direct impact of US tariffs on India’s steel industry might appear limited, the broader market dynamics suggest a complex scenario. The potential redirection of surplus steel to India could exert downward pressure on domestic prices, challenging Indian manufacturers. Accordingly, strategic planning and market diversification will be crucial for India to navigate these global shifts and sustain its growth trajectory.
(Write to us at legalipr@bombaychamber.com)
