The Indian steel market may become a victim of diverted shipments putting pressure on local prices, following the levy of a 25 percent tariff by the US administration on all steel and aluminium imports into the US, Indian rating agency ICRA said in a report on Thursday, February 13.
The US trade measures cut both ways for the domestic steel industry. First, deliveries of 4 million mt to the US from Asian suppliers like Japan and South Korea, which until now had preferential market access in the US, could be partly diverted to a high-growth region like India, ICRA said.
It noted that Japan and South Korea rank among top three steel exporters to India, accounting for 40-55 percent of overall Indian steel imports.
Given the duty-free access on account of the free trade agreements (FTA) with India, import pressures from South Korea and Japan could increase in the fiscal year 2025-26, as Japan and South Korea search for alternative markets.
This can exert pressure on Indian steel prices, pulling down the industry's earnings further in 2025-26. Unlike South Korea and Japan, China has a limited presence in the US, as its steel exports are already exposed to the 25 percent tariff. Therefore, redirection of trade flows from China remains less of a threat after the latest tariff announcement, the rating agency said.
