Surge in steel imports affect domestic industry players' gross margins: Ind-Ra

The increasing steel imports to India — particularly from the third quarter of FY24 — have affected the gross margin spreads in the domestic steel industry, it said.

The surge in steel imports has impacted the margins of domestic players, and such pressures are likely to intensify in the second half of the ongoing fiscal year, a report said on Tuesday.

The report covers global causes of increased steel imports to India, the likely trajectory of imports, key exporting nations, and the domestic demand-supply balance, India Ratings and Research (Ind-Ra) said in a statement. The increasing steel imports to India — particularly from the third quarter of FY24 — have affected the gross margin spreads in the domestic steel industry, it said.

"Ind-Ra believes the Indian steel industry is witnessing margin pressure because of higher volumes of lower-priced steel imports from China, Vietnam, Japan, and Korea, and such pressure is likely to intensify over 2HFY25," it stated. As per the report, the Chinese steel export volumes were at their peak in FY25 over at least the past 21 quarters, as its domestic steel prices have been consistently declining, keeping international steel prices subdued along with global demand headwinds.

Ind-Ra said it expects the imports to remain elevated over the short-to-medium term, which may dampen domestic realizations and hence further impact the gross margins over the October-March period in FY25.