US tariffs may divert steel shipments to India, affecting local prices

Indian steel market may become a victim of diverted shipments putting pressure on local prices, Icra said after the US administration announced 25 per cent tariff on all steel and aluminium imports.

The latest trade measures cut both ways for the domestic steel industry. First, deliveries of 4 MTPA to the US from Asian suppliers like Japan and South Korea, which till now had preferential market access, could be partly bounced-off to high-growth markets like India, Icra said.

Icra noted that these two countries rank among the top three steel exporters to India, accounting for 40-55 per cent of India's overall finished and semis (finished) steel imports.

Given the duty-free access on account of the free trade agreements (FTA) with India, import pressures from South Korea and Japan could increase in FY2026 as they search for alternate markets.

This can exert pressure on domestic steel prices, pulling down the industry's earnings further in FY2026. Unlike South Korea and Japan, China has a limited presence in the US, as its steel exports are already exposed to the 25 per cent tariff. Therefore, redirection of trade flows from China remains less of a threat after the latest tariff announcement, Icra said.

US President Donald Trump has announced a 25 per cent tax on steel and aluminium imports from all countries. The new tariffs will be imposed on March 12.