Indian steel prices pressured by rising Chinese imports

Indian steel prices are expected to face challenges in the next fiscal year. This is largely due to cheaper steel being imported from China and increasing tariff pressures, according to Fitch Ratings. The agency recently downgraded the outlook for India's leading steelmakers, including JSW Steel and Tata Steel. JSW Steel has a "BB" rating with a stable outlook, while Tata Steel holds a "BBB-" rating with a negative outlook. China, the largest steel producer in the world, has been struggling with profit margins as a downturn in its property market has decreased demand. This has led to a rise in its exports, particularly to India. In the first ten months of the current fiscal year, there has been a significant increase in steel imports from China, South Korea, and Japan, reaching record levels. Steel prices in India dropped to their lowest in over three years in August 2023. India's fiscal year runs from April to March. Additional concerns have arisen from recent U.S. tariffs on steel and aluminum imports, imposed by President Donald Trump. While these tariffs may not directly impact Indian manufacturers, there is a risk that redirected steel imports could further pressure domestic prices. Fitch expects some improvement in profit margins for JSW Steel and Tata Steel next year. This improvement is expected to be supported by growing domestic demand and lower raw material costs, along with potential restrictions on Chinese exports. However, the agency warns that these margins may still be below average, affecting the companies' ratings, especially for Tata Steel, which faces challenges from its European operations and local mining taxes.