US Import Tariff Hike on Steel &

Aluminium: Impact Analysis on

Indian Corporates
February 18, 2025 l Ratings

Synopsis
• India’s direct steel exports to the US are relatively low, constituting around 4% of its total exports in CY24.
As a result, the direct impact on the steel sector’s sales volume due to the imposition of tariffs by the US is
not expected to be significant. However, there is likely to be an indirect effect on realisations if major steel
exporters to the US divert some of their supplies to India.
• Global steel consumption is expected to decline for the second consecutive year in CY24, mainly due to a
decline in consumption from major developed countries, including the USA, Japan and the European region.
• China, which accounts for nearly half of global steel production and demand, also experienced a continued
decline in domestic consumption. However, the capacity utilisation rate of the Chinese steel industry remains
above 80-85%. This, combined with declining domestic demand, has led to significant surplus production
being exported, estimated at around 90-95 million tonnes (MnT) during CY24, an increase from
approximately 65 MnT previously CY22.
• India continues to witness good demand for steel, growing at around 10-13% during the last three fiscal
years (FY22 to FY24).
• Weakening demand in major steel-consuming economies has led to an over-supply situation, thereby adding
pressure on realisations. Global steel prices (world export prices for Hot Rolled Coil) have averaged around
US$ 535 per tonne during CY24, down from around US$ 788 per tonne recorded in CY22. Global steel prices
declined in CY25, hovering around US$ 481 per tonne in January 2025.
• An increase in import tariff by the US could result in the diversion of surplus production by major Asian steel
manufacturing countries to Indian markets, which is likely to keep realisations under check. During 10MFY25,
realisations of the domestic steel industry have already witnessed moderation with growing imports of steel
whereby India has turned a net importer vis-à-vis a net exporter up to FY24 – even though the overall
volume of steel import into India is low compared to total domestic consumption, the realisations tend to
mirror the landed cost parity with international prices.
• India is a major exporter of primary aluminium (around 40% of our domestic aluminium production is
exported during CY24). India’s direct aluminium exports to the US are around 6-8%. Consequently, the
impact of the tariff hike on export volumes and its realisations for Indian aluminium producers is expected
to be higher than that of domestic steel manufacturers. However, India remains one of the lowest-cost
aluminium producers globally, mainly on account of the availability of quality bauxite reserves, which
improves India’s cost competitiveness in the global market – this can provide greater cushion to domestic
aluminium producers to meet the increased competition from any over-supply scenario arising from the
imposition of tariff by the US.

Impact of US tariff hike on steel and aluminium industry

The USA has imposed a 25% import tariff on steel and aluminium products worldwide to boost domestic production.
A similar order was issued in 2018 after several bilateral talks with countries impacted by the tariff hike.

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 US import tariff hike on Steel & Aluminium: Impact Analysis on
Indian Corporates

Subsequently, relief was extended to numerous significant and strategically important steel and aluminium
exporting countries to the US. This time, however, the order also encompasses the termination of any previous
exemptions granted to these countries.

Over the last two decades or more (CY04-24), the US has remained a major importer of steel in the global market,
with imports on average accounting for around 20% of its total domestic steel consumption.

US Steel industry scenario:

(Million Tonnes)
140 100
120 80
100 60
80 40
60 20
40 0
20 -20
0 -40

CY24 E
CY05

CY06

CY07

CY08

CY09

CY10

CY11

CY13

CY15

CY16

CY17

CY18

CY19

CY20

CY21

CY22

CY23
CY04

CY12

CY14

Capacity Production Consumption Net Import/Export (RHS) Capacity Utilization (%) (RHS)

Source: OECD, USGS, World Steel Association, CareEdge Ratings

Although US steel capacity is adequate to meet domestic demands, capacity utilisation levels have remained low,
resulting in ongoing import dependence. This lower utilisation can also be attributed to higher production costs
than other major steel-producing countries. The increased cost of production and subsequent import reliance have
led US steel prices to command a significant premium, thereby attracting imports. Over the past four years (CY21
to CY24), US steel prices, on average, were approximately 50% higher than Chinese steel prices, while they were
around 23% and 38% higher than Western European and global export prices, respectively.

Hot-Rolled Band steel prices

(US$/Tonne) US China Western Europe World Export

1000

800

600

400

200

0
Jan-21

May-21

Jan-22

May-22

Jan-23

May-23

Jan-24

May-24

Jan-25
Sep-21

Sep-22

Sep-23

Sep-24
Nov-21

Nov-22

Nov-23

Nov-24
Mar-21

Jul-21

Mar-22

Jul-22

Mar-23

Jul-23

Mar-24

Jul-24

Source: Steel Benchmarker

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 US import tariff hike on Steel & Aluminium: Impact Analysis on
Indian Corporates

The tariff order comes in as a respite for the US steel industry, given the subdued demand environment for the
metal as reflected from the declining trend of steel consumption in last two-three years, which along with higher
levels of import has resulted in prolonged lower capacity utilization rates and lower profitability margins for the US
steel producers.

Canada, Brazil, and Mexico remained the major steel exporters to the US market during CY24. Meanwhile, several
Asian countries, such as South Korea, Japan, Taiwan, China, and Vietnam, contributed significantly to steel exports
to the US market. Considering the tariff increase by the US, surplus steel production could be redirected to other
countries, including India.

Canada 6.0 23

Brazil 4.1 16

Mexico 3.2 12

South… 2.5 10

Japan 1.1 4

Taiwan 0.9 4

China 0.5 2
Vietnam 5
1.2
India 1
0.2
0.0 5.0 10.0 15.0 20.0 25.0

% Share of Total US Imports Mn Tonnes

Source: US Department of Commerce

Indian Steel Industry

Over the past decade (FY14-24), India’s steel capacity has achieved a compound annual growth rate (CAGR) of
approximately 4.60%, while domestic steel consumption has risen at a CAGR of about 6.30%. In the FY20-24
period, while capacity expanded at a CAGR of roughly 3%, consumption surged by around 8%, benefitting the
domestic steel industry. Most domestic steel capacity additions were undertaken with the significant growth in
domestic steel consumption in mind. However, from FY24 onwards, India has become a net importer of steel
products.

Domestic steel consumption has increased by around 13-14% during FY24 and H1FY25. Despite a robust growth
in domestic steel consumption, realisations during this period have remained under pressure, mainly due to the
decline in global steel prices. Domestic prices are based on the landed cost parity with international prices. During
FY24, imports in the domestic market increased by around 38% and 20% during the first 10 months of FY25. While
India’s exports increased by around 11% in FY24, it recorded a sharp decline of around 29% during the first 10
months of FY25.

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 US import tariff hike on Steel & Aluminium: Impact Analysis on
Indian Corporates

Indian steel industry scenario: India has again turned into a net importer of steel:
(Mn Tonnes) (percent) (Mn Tonnes)
200 100 15

80
150 10
60
100
5
40
50
20 -
FY20 FY21 FY22 FY23 FY24 Apr_Jan
0 0 25
FY20 FY21 FY22 FY23 FY24
-5

Capacity Consumption
Capcity Utilization (RHS) -10 Imports Exports Net (Imp)/Exp

Source: CMIE, JPC, CareEdge Ratings

The surge in import volumes has resulted in lower realisation in domestic prices, thereby impacting the profitability
of domestic steel producers.

Aggregated quarterly data for the sample set of four large integrated steel players in the domestic market, which
represents around 48% of the total domestic steel capacity, has shown a decline in net sales realisations (NSR) of
around Rs 5,850 per tonne and profitability (PBILDT) of around Rs. 1,600 per tonne during the first 9MFY25 when
compared with the same period last year. However, softening in key raw material prices has partially aided the
decline in profitability for these players.

Profitability margins for domestic integrated steel producers:

90,000 (Rs./Tonne) (Rs./Tonne) 16,000

80,000 14,000
12499
70,000 10,739 9,990 12,000
60,000 10,561
10,000
50,000
8,000
40,000
6,000
30,000 5954
20,000 4,000
10,000 2,000
0 0
Q1FY23

Q2FY23

Q3FY23

Q4FY23

Q1FY24

Q2FY24

Q3FY24

Q4FY24

Q1FY25

Q2FY25

Q3FY25

NSR RM Cost PBILDT (RHS)

Source: Company presentations, CareEdge Ratings

Globally, India is the second largest producer and consumer of steel after China. Given the robust growth in India’s
domestic steel demand as against an otherwise subdued global steel industry and the negligible level of direct steel
exports from India to the US, CareEdge Ratings believes that although the recent tariff order may not directly affect
the Indian steel producers; but it has the potential to keep their sales realisations under check if some of the major
suppliers to the US start diverting their exports to other markets, including India. Further, India exported around
6.3 MnT of steel during CY24. Given the anticipated rise in competition in export markets, Indian players may

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 US import tariff hike on Steel & Aluminium: Impact Analysis on
Indian Corporates

encounter lower export volumes, which would increase domestic supply and subsequently exert pressure on
realisations.

India’s total steel exports and US share in it US steel Imports and India’s share in US imports
(Mn Tonnes) (Percent) (Mn Tonnes) (Percent)
14 30 29 28 10
28
28
12 25 8
28
10 27
20
8 26 6
27
15
6 26 26
4
7.9 10 26
4 2.8
4.5 3.65 25 2
2 1.6 25 1.29 2.22
0 0 1.19 0.86 0
24
CY20 CY21 CY22 CY23 CY24 CY21 CY22 CY23 CY24
Total Exports US share in Exports (%) Total Imports India's share in Imports (%)

Source: JPC, US Department of Commerce

Aluminium:
Aluminium production through the primary route remains lower in the US than in the secondary route (scrap route).
However, the US aluminium industry remains significantly dependent on imports, with around 75% of the US
aluminium’s apparent supply (primary + secondary production + imports–exports + adjustments for stock changes;
excludes imported scrap) being primarily met through imports. Canada remains the largest exporter of aluminium
to the US, followed by UAE and China.

US aluminium industry scenario: Major countries exporting aluminium to the US:

(Mn Tonnes) (Percent)
Canada 58%
10.0 100 3.15
UAE 6%
8.0 80 0.35
China 4%
6.0 60 0.22
Argentina 4%
0.18
4.0 40
Bahrain 4%
0.20
2.0 20
India 3%
0.16
0.0 0 3%
Australia 0.08
CY17 CY18 CY19 CY20 CY21 CY22 CY23 CY24
Apparent Supply 0.00 1.00 2.00 3.00 4.00
Imports
Imports % to Apparent Supply (RHS) % Share of Total US Imports Mn Tonnes

Source: USGS, US Department of Commerce

China remains the largest producer of primary aluminium, holding approximately 60% of the global production
share, while India ranks as the second largest producer, contributing around 6%. Unlike steel, India is a net
exporter of aluminium, with nearly 40% of its primary aluminium output being exported. The US accounts for about
6-8% of India's total aluminium exports, representing a larger share of aluminium exports than steel exports.

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 US import tariff hike on Steel & Aluminium: Impact Analysis on
Indian Corporates

Indian aluminium industry scenario: India’s aluminium exports and the US's share in it
(Mn Tonnes) (Percent) (Mn Tonnes) (Percent)
4.5 80 3.0 2.7 15
68 2.6
4.0 64 70 13
63 2.5 2.3
3.5 60
3.0 51 2.0 11
47 50 1.9
2.5 38 2.0
40 7.3 8.5 9
2.0
30 1.5 7
1.5 6.4
1.0 20 6.0 5
10 1.0 4.4
0.5 3
0.0 0 0.5
1
9MCY24
CY20

CY21

CY22

CY23

CY24

0.0 -1
CY20 CY21 CY22 CY23 CY24* P
Production Consumption India Total Exports Exports to US
Exports % Exports (RHS) (% of Total Exports)
Source: CMIE, US Department of Commerce

Likely impact on the Indian steel and aluminium industry:

• Diversion of surplus steel to India and consequent increased competition: Given the tariff hike by the US,
surplus steel production could be redirected to other countries. Even if we consider the current major Asian
steel exporters to the US (which include Vietnam, China, Japan, South Korea, and Taiwan), these countries
collectively exported approximately 6.2 million tonnes (MnT) of steel in CY24. Considering that around 50%
of this steel is being redirected to the Asian market, with India being the only significant growth market, this
could raise the supply by about 3 MnT. The proportion of shipments redirected to India may increase notably,
particularly from countries like South Korea and Japan, with which India also has a Free Trade Agreement.
Both countries exported around 3.7 MnT of steel to the US during CY24.
• Pressure on domestic steel prices and profitability: Despite good growth in domestic steel demand, NSR in
the domestic market remains under pressure, impacting domestic companies' profitability. CareEdge Ratings
believes NSR and profitability margins may remain under pressure with the likely surge in imports in the
domestic market.
• Impact on domestic aluminium manufacturers: India exports primary aluminium (around 40% of our domestic
aluminium production is exported). India’s direct aluminium exports to the US are around 6-8%. Consequently,
the surge in tariff in the US is likely to have a relatively higher impact on export volumes and its realisations
for Indian aluminium manufacturers than steel manufacturers. However, India, one of the lowest cost
producers of aluminium globally on account of good quality of bauxite reserves, is expected to provide some
cushion to the impact.

CareEdge Ratings’ View

“Amid a subdued global environment, growth in Indian steel demand is expected to continue at a CAGR of around
8% over the next 2-3 years, primarily driven by sustained momentum in end-user sectors such as infrastructure
and construction. The tariff hike by the US may lead to a substantial amount of surplus production being redirected
to other countries, notably the Indian market, which is among the fastest-growing globally. Over the past 3-4
quarters, the domestic steel industry has faced margin pressure owing to a significant decline in realisations,
influenced by cheaper imports of steel products. This trend may persist due to an increased steel surplus resulting
from the recently imposed tariffs by the US. The impact on aluminium manufacturers is anticipated to surpass steel,

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 US import tariff hike on Steel & Aluminium: Impact Analysis on
Indian Corporates

as exports account for 40% of India’s primary aluminium output. However, India stands to gain from being one of
the lowest-cost aluminium producers, owing to the availability of high-quality bauxite reserves,” says Hitesh
Avachat, Associate Director, CareEdge Ratings.

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 US import tariff hike on Steel & Aluminium: Impact Analysis on
Indian Corporates

Net NPAs
Large PSBs 1 0.86 0.79 0.71 0.64 0.57 0.53 0.49 0.48 0.43 -0.25 -0.11
Other
0.56 0.5 0.44 0.39 0.41 0.29 0.26 0.25 0.21 0.21 -0.25 0.03
PSBs
PSBs 1.55 1.36 1.22 1.1 1.05 0.86 0.79 0.74 0.69 0.64 -0.25 -0.07
Source: Ace Equity, CareEdge Calculations, Note: Includes 14 PSBs (5 Large, 9 Others,) and 16 PVBs (3 large, 13 others)

Contact
Ranjan Sharma Senior Director ranjan.sharma@careedge.in +91 - 22 - 6754 3453
Pulkit Agarwal Director pulkit.agarwal@careedge.in +91 - 22 - 6754 3596
Hitesh Avachat Associate Director hitesh.avachat@careedge.in +91 - 22 - 6754 3510
Mandar Avachar Analyst Mandar.avachar@careedge.in
Mradul Mishra Media Relations mradul.mishra@careedge.in +91 - 22 - 6754 3596

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