US tariff unlikely to impact Indian steel market: Icra

New Delhi: The imposition of 25 percent import tariff on steel products by the US is unlikely to have any significant impact on the domestic steel industry in the medium term, ratings agency Icra said.

The US government recently announced its decision of imposing a 25 percent tariff on import of steel products and 10 percent tariff on aluminium.

The order is effective from March 23, 2018.

"The 25 percent import tariff on steel products by the US is unlikely to have any significant impact on the domestic steel industry in the medium term," Icra said in a statement.

Icra noted that this duty would be effective on all countries except Canada and Mexico which together comprises about a quarter of the total US imports.

The impact of import tariffs may not be significant in the medium term due to reasons like global steel demand (ex-USA) is expected to increase by 25 MT in CY2018.

"Chinese steel exports has been steadily declining in the last two years, reaching 75 MT in CY2017 from the peak level of 112 mt in CY2015, and in the current year too, exports have continued to shrink, declining by 27.1 percent in the first two months of CY2018. This trend is expected to continue throughout CY2018 on the back of a resilient Chinese domestic demand and proposed steel capacity cuts," it said.

"India's steel exports to the USA market remained a meagre 0.7 mt in CY2017, accounting for less than 1 percent of India's domestic demand. Therefore, Indian steel mills should be able to find an alternate market for its nominal US export volumes without much difficulty," ICRA's Senior Vice President said in the statement.