ICRA: India May Face Pressure from Diverted Steel Shipments After US Tariff Levy
India’s steel market may soon face the consequences of diverted steel shipments, putting additional pressure on local prices. This concern follows the US administration’s decision to impose a 25% tariff on all steel and aluminium imports into the country. According to a report from the Indian rating agency ICRA, released on February 13, this shift in trade flows could impact the Indian market significantly.
The new US trade measures are likely to affect the global steel market in several ways. One of the major consequences is that up to 4 million metric tons (mt) of steel that previously had preferential access to the US market—coming from Asian suppliers like Japan and South Korea—could be redirected to other regions, including India. Both Japan and South Korea are among the top three steel exporters to India, together accounting for 40-55% of India's overall steel imports.
The report highlights that with the preferential access these countries have to the Indian market under Free Trade Agreements (FTAs), increased imports from Japan and South Korea could be expected in the fiscal year 2025-2026 as these nations search for new markets due to the tariff impacts in the US.
As a result, India may see an increase in steel imports, which could exert downward pressure on domestic prices and squeeze the earnings of local producers even further. However, China, which already faces the 25% US tariff on its steel exports, is less likely to be a major factor in this trade diversion, as its steel shipments to the US remain limited.
The redirection of steel trade flows due to the US tariff policy will require careful monitoring, as it could have significant consequences for India’s steel sector in the coming years.
Source: SteelOrbis
?? What does this mean for India’s steel sector?
1?? Increased steel imports
2?? Pressure on domestic prices
3?? Squeezed earnings for local producers
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