More Stories

Informist, Wednesday, Mar. 5, 2025

 

MUMBAI – Domestic mills could face a glut of imported steel as US tariffs reshape global trade flows, S&P Global Ratings said in a report. The downside risks on steel prices are greater than the likely cost benefits on inputs, it said. 

 

The rating firm expects a correction in steel prices by INR 3,000 per tonne. The consolidated debt-to-EBITDA for large Indian steel companies could rise to 3.5 in 2025-26 (Apr-Mar), it said.

 

"India's steelmakers are caught up in rising geopolitical and trade tensions, and that's creating more uncertainty in their outlooks," sais Anshuman Bharati, a credit analyst at S&P Global Ratings. "Under our new downside scenarios, leverage would be 45% higher than our base case," Bharati added.

The 25% tariffs announced by the US on steel imports will take effect from Mar. 12. Exports to the US are becoming expensive, diverting flows to other geographies, the report said. "Korea and Japan may divert more exports toward India," Bharati said. The two countries account for 15% of the 26 million tonnes of steel imported by US last year.

 

India has free trade agreements with both Japan and Korea and gets 40% of its steel imports from the two countries. Domestic steel prices in India are also under pressure from cheaper imports from China, the report said. "The higher-import threat comes while India is ramping up about 15 million tonnes of newly built steel capacity that was added during 2024. Sluggish steel prices could delay the full utilisation of this capacity and may hinder expansion," Bharati said.

 

Indian steel companies have requested government intervention to protect the domestic steel industry. "The government previously employed trade protection measures to check the influx of cheaper imports. Should similar measures be implemented again, they could insulate domestic producers from international price volatility and safeguard their earnings," Bharati said.

 

China's tariff hike on US coking coal could provide some relief to Indian steel producers, it said. The 18% tariff will likely create a surplus of US origin coking coal in the seaborne market, which could lower the prices and improve the profitability of Indian steelmakers.  End

 

Reported by Ashutosh Pati

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.