METAL MIGHT

Amid a 25% US tariff and a global glut, India's steel sector surges with bold capacity expansions, defies mounting pressures, and calls for government intervention

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The global steel sector is making headlines as the United States has imposed a 25% import tariff on steel products worldwide to boost domestic production. Although India exports less than 1,00,000 metric tonnes per year to the US - less than 4% of its total steel exports - the indirect impact of the tariff on India remains a major concern.

Major US suppliers, including Canada, Brazil, Mexico, and several Asian countries such as South Korea, Japan, Taiwan, China, and Vietnam, could divert their steel production, potentially keeping the sales realizations of Indian steel in check. Moreover, a higher global surplus may drive down steel prices, affecting domestic prices.

In recent months, steel prices have been trending lower due to increased global surplus, which has intensified competition and reduced profitability in the domestic market. Consequently, the tariff imposed by US is expected to hit the steel sector in India indirectly.

CURRENT STATUS

India's steel sector has emerged as a bright spot in the global arena. With current steel production around 175 million tonnes and domestic production at about 145 million tonnes, the country consumes roughly 137 million tonnes - importing the difference.

According to data from ratings agency CareEdge, over the past decade (FY13-14 to FY23-24), India's steel capacity grew at a CAGR of approximately 4.60%, while domestic consumption rose at about 6.30%. In the FY20-24 period, capacity expanded at roughly 3% CAGR, whereas consumption surged by around 8%, benefiting the domestic industry.