Steel Market Insights: Week 1 Recap (March 1 - March 5, 2025)

Welcome to SteelBazaar Insight's inaugural weekly recap, where we provide a comprehensive overview of the latest developments in the steel industry, with a focus on the Indian market.

Global Production and Policy Developments

• China's Output Reduction Plans: China has announced intentions to restructure its steel industry by reducing output to address overcapacity and global trade tensions. While specific targets were not disclosed, there is speculation about a potential reduction of approximately 50 million metric tons of crude steel. This marks the first time the National Development and Reform Commission (NDRC) has proposed such cuts in its draft plans. Chinese steelmakers are currently facing profitability challenges due to a domestic property downturn and increasing trade frictions, with countries like Vietnam and South Korea imposing anti-dumping duties on Chinese steel products.

• U.S. Tariffs and EU Response: The European Union is deliberating support measures for its steel industry in light of impending U.S. tariffs on steel and aluminum imports. EU Commission Chief Ursula von der Leyen engaged with industry leaders to address challenges such as high energy costs and the transition to low-carbon production. The EU is considering extending or modifying existing safeguards to protect its steelmakers from unfair competition and to support their sustainability efforts.

Market Movements

• Iron Ore Prices: Iron ore futures experienced a decline ahead of the implementation of U.S. tariffs on Chinese imports. The most-traded May iron ore contract on China's Dalian Commodity Exchange dropped by 1.39% to 779 yuan per metric ton, while the benchmark April iron ore on the Singapore Exchange eased slightly to $99.7 per ton. This downturn is attributed to Chinese steel mills cutting production to reduce pollution ahead of the National People's Congress meeting and escalating trade tensions between the U.S. and China.

• Tata Steel Performance: Tata Steel Ltd. shares saw a modest increase of 0.58% to 139.30 Indian rupees, outperforming the BSE SENSEX Index, which fell by 0.13% to 72,989.93. Despite this uptick, Tata Steel's stock remains 24.54% below its 52-week high of 184.60 rupees, achieved on June 18th. Trading volume for Tata Steel was 855,414, below the 50-day average of 1.4 million.

Indian Steel Industry Highlights

• Record High Finished Steel Imports: During the April-January period of the current fiscal year, India imported a record 2.4 million metric tons of finished steel from South Korea, marking an 11.7% increase from the previous year. Imports from China reached 2.3 million metric tons, a 3.4% rise, and imports from Japan surged by 88.6% to 1.8 million metric tons. These three countries accounted for 78% of India's total finished steel imports. In response to the surge in imports, the Indian government is considering imposing a safeguard duty ranging from 15% to 25% to protect domestic producers.

• Impact of U.S. Tariffs: The Indian steel industry is assessing the potential consequences of the U.S. administration's tariffs on steel and aluminum imports. While small businesses anticipate benefits from cheaper steel due to market adjustments, the Indian Steel Association expresses concerns about an influx of dumped steel disrupting the domestic market. India's steel demand is projected to increase significantly, furthering emissions from coal-based blast furnaces used primarily in production. Efforts to decarbonize the industry remain secondary to rapid growth objectives, posing challenges for future exports, particularly to regions with stringent carbon regulations like Europe.

• Import Restrictions on Raw Materials: India is considering extending restrictions on low-ash metallurgical coke imports beyond June to encourage domestic sourcing by local steel mills. Initially, country-specific quotas were imposed to limit total imports to 1.4 million metric tons until the end of June. Despite concerns over the quality of domestic met coke, the government emphasizes the need for self-reliance and bolstering local production.

Looking Ahead

The global steel industry is navigating a complex landscape marked by policy shifts, market volatility, and operational challenges. In India, the surge in steel imports, potential safeguard duties, and the emphasis on domestic sourcing of raw materials are critical factors influencing the market. The industry's focus on balancing rapid growth with environmental sustainability and competitiveness on the global stage remains pivotal.

Stay tuned to SteelBazaar Insight for continuous updates and in-depth analyses of the steel market.