Rating agencies see little impact

MUMBAI: The proposed 25% additional import duty on Indian steel bound for the US shores will not have any material impact on the domestic players as only 2 % of the domestic production is bought by American consumers, while there will be some impact in terms of realisation on aluminium producers as 6-8% of domestic production is shipped to that country, say analysts at two rating agencies.

In a note on the US tariff threats on Indian steel, Crisil said on Tuesday that the move to slap a flat 25% tariff on steel imports from March 12 is unlikely to be impacted materially because only 2% of our finished steel is exported to the US in the first nine months of this fiscal. This is because local steel mills will divert their inventory to other importer-nations at aggressive prices. This could bring down domestic prices, which are already trending at four-year lows, further, said Sehul Bhatt, a director with Crisil.

This would mean  that the government may have to step in with safeguard duties to support domestic capacities.

In a note, Care Ratings senior director Ranjan Sharma said domestic steel mills shipped only around 4% of their total exports to the US in 2024. As a result, there is likely to be very little  direct impact due to higher 25% duty being imposed from next month.

“However, there is likely to be an indirect effect on realisations if major steel exporters to the US divert some of their supplies to our market,” said Sharma.

While global steel market has been falling, domestic steel demand has been growing at around 10-13% during the last three fiscal years.

Global steel prices have averaged around $535/ tonne in 2024, down from around $788/tonne in 2022 and is hovering around $481 in 2025.