With the United States imposing import duties of 25% and 10% steel and aluminium under the Trump administration, Indian companies will not be directly hit, but could get hurt due to higher supply pressure in the countries where India is a major exporter, said a report by India Ratings and Research.
India’s steel and aluminium companies’ exports to the US are as low as 2% and 6% respectively. “However, the impact could percolate through lower international prices due to excess supply from exporting countries while also leading to lower exports,” Ind-Ra said.
According to CMIE data, India’s top exports countries for steel and aluminium are South Korea, Malaysia, Italy, Vietnam and Belgium among others. Due to the higher import duty in the US, Ind-Ra said, the countries which export majority to the country may diversify into other importing geographies. “The move can prove as a deterrent to a gradual recovery especially in the steel industry,” the report said.
“Global price corrections could further delay the deleveraging plans of Indian steel players,” it added. Though Indian steel imports would be restricted to specialised products not manufactured in India, a situation of cheap availability of imports may prove as a double whammy, especially against the backdrop of a growing domestic demand of steel.
India primarily exports steel to Italy, the UAE and South East Asian countries. With export markets becoming more competitive, domestic steel companies may not only lose their market share in the exporting regions but also see the export value declining due to lower global prices of steel and aluminium.
Ind-Ra maintained a stable outlook for the steel and aluminium industries, however, said that volatility due to the US trade tariff may “warrant a revision”.