(Reuters) – Indian steel prices will face pressure in the upcoming fiscal year as local mills grapple with cheaper imports from China and rising risks from aggressive tariff policies, Fitch Ratings said on Tuesday.
The agency reduced its headroom for ratings upgrades for India’s top steelmakers by market cap – JSW Steel, currently rated “BB” with stable outlook, and Tata Steel, which it rates “BBB-” with a negative outlook.
Steelmakers in China, the world’s largest producer of the alloy, have been grappling with generating profits as a prolonged property downturn has hit consumption, leading to higher exports to countries such as India.
As a result, local mills have been battling a rising influx of discounted steel, with intake from China, South Korea and Japan hitting a record high in the first 10 months of the ongoing fiscal year. Prices dropped to their lowest level in more than three years in August last year.
India’s fiscal year runs April through March.
Meanwhile, U.S. President Donald Trump’s 25% tariffs on steel and aluminium imports, which came into effect on March 12, have triggered retaliation from its major trading partners.
While the tariffs are expected to have “minimal direct impact” on local steelmakers, the redirection of steel imports from countries with higher exposure to the U.S. into India could pressure domestic prices, the agency said. Japan and South Korea account for 15% of total steel imports to the U.S.
Earlier this month, ratings agency S&P Global highlighted similar concerns around the tariffs causing supply redirections.
Fitch expects JSW Steel and Tata Steel’s margins to improve in the upcoming year, helped by higher domestic demand, lower raw material costs and China’s stimulus measures as it would limit imports into India, but said they will remain below average.
The lower margins remain a risk for the companies’ ratings, with Tata Steel at higher risk from the restructuring in its European operations and from mining taxes imposed by Indian states.
(Reporting by Manvi Pant in Bengaluru; Editing by Varun H K)
