Indian steel prices seen dropping on US tariffs

Indian domestic steel prices may witness a correction of around INR 3,000/tonne ($34.45/t) due to the potential redirection of excess supply into India amid US import tariffs.

US reciprocal tariffs, including on India, will come into effect from 2 April. These will disrupt export markets and pressure local steelmakers, possibly delaying full utilisation of newly added Indian capacity, credit ratings agency S&P Global Ratings says in a report seen by Kallanish.

"India's steelmakers are caught up in rising geopolitical and trade tensions and that is creating more uncertainty in their outlooks," says S&P Global Ratings analyst Ayushman Bharati.

"The higher import threat comes while India is ramping up about 15 million tonnes of newly built steel capacity that was added during 2024," Bharati adds. "Sluggish steel prices could delay the full utilisation of this capacity and may hinder expansion," he says.

“Our downside scenario for a price correction is now harsher, at INR 3,000/tonne. Under this scenario, the consolidated ratio of large Indian steel companies may rise to 3.5x in fiscal 2026. That is significantly higher than our base case of 2.4x,” he concludes.

The report suggests that while cheaper coking coal resulting from shifting trade barriers could provide some offset to the risks, the downside risks to steel prices outweigh the potential cost benefits from inputs.

Rising steel imports have been a major concern for domestic steelmakers. Around 40% of India’s steel imports come from Japan and South Korea; the country has free-trade agreements with both. Cheaper China-origin imports are meanwhile putting pressure on domestic prices.

India will likely see a higher influx from these countries, once the tariffs are imposed, the report says. 

Indian finished steel imports from South Korea, China and Japan reached a record high in April 2024-January 2025 – the ten months of the current fiscal ending in March 2025 (see Kallanish passim).

Earlier this week, Indian steel minister HD Kumaraswamy is reported to have said India plans to formulate a steel tariff strategy once it gains clarity on the impact of US tariffs (see Kallanish passim).

In February, the Indian Steel Association requested government intervention to protect the domestic steel industry (see Kallanish passim).

Source:Kallanish