Proposed steel import duty may drive prices higher in 2025: CRISIL

In 2024, domestic steel prices fell, influenced by higher net imports

Steel prices in 2025 would be “much higher” if the proposed safeguard duty on steel imports is imposed, CRISIL said in a report released on Wednesday. The impact was expected to be more prominent in the first half.

 

Union Steel Minister HD Kumaraswamy recently told a news agency that the government was considering a proposal to impose 25 per cent ‘safeguard duty’ on steel imports. It comes after several industry players raised concerns about cheap steel imports from China and some other countries.

 

“Domestic prices are under pressure due to global steel price decline and are expected to remain soft in 2025. Prices have a 4-6 per cent upside potential hinged on implementation of the safeguard duty,” Vishal Singh, manager-research, CRISIL Market Intelligence and Analytics, said.

   

As mills ramp up production volume from the newly-commissioned capacities, increase in supply will reduce flat steel prices, but it will still be higher than average price of 2024, Singh added.

 

“That said, intense competition among mills to gain market share could limit the upward movement.”

 

In 2024, domestic steel prices declined, impacted by additional material availability due to increase in net imports. Hot rolled coil (HRC) prices declined 9 per cent and cold rolled coil (CRC) prices declined 7 per cent, thereby slowing topline growth of domestic mills, the report noted.

 

However, the rating agency also said that falling coking coal prices, along with low volatility, helped reduce margin pressure “somewhat”.

 

Coking coal spot price for the premium low volatility grade, Australia-origin, declined 12 per cent in 2024, whereas iron ore prices are estimated to have increased by 9-10 per cent during the period, it said. China HRC export prices declined 12 per cent in 2024 and are still trading at a discount to domestic mill prices.

 

Imposition of a safeguard duty proposed by the industry could be a positive here, the report noted.

 

The report also said that steel demand in India will continue to outpace other major steel consuming economies in calendar year 2025 with a growth of 8-9 per cent, driven by a shift towards steel-intensive construction in the housing and infrastructure sectors along with better demand from engineering, packaging and other segments.

 

In 2024, global steel demand is estimated to have declined 1 per cent. Demand in China, the largest steel producer and consumer, declined 3.5 per cent, led by declining steel demand from the real estate sector, despite conducive policy changes and release of support packages.

 

Steel demand from Europe, Japan and the US also logged an estimated demand de-growth of 2-3 per cent. “However, demand growth in developing economies such as India and Brazil kept global demand from declining steeply. Demand is estimated to have increased 11 per cent in India, 5.6 per cent in Brazil and 2.7 per cent in other steel consuming economies,” it said.

 

In 2025, global steel demand is expected to inch up by 0.5-1.5 per cent on the back of easing financing conditions and pent-up demand from some key steel consuming economies, which will support manufacturing activities.

 

“An anticipated recovery in residential construction in economies such as the EU, US and Korea in line with easing of financing conditions will support growth, too. India will continue to lead the pack in terms of demand,” the report said.