New steel tariffs mixed bag for Indian companies making in US
The Donald Trump-led US government is set to double tariffs on the import of steel and aluminium to 50% from Wednesday. International media reports suggest that the move is aimed to protect workers in the US as the proposed takeover of US Steel by Nippon Steel could receive an approval soon. While most of the steel produced in India is consumed locally, higher tariffs in the US may lead to steel being dumped in other regions, including India, which could impact prices in the domestic market.
JSW Steel
, which has a steel manufacturing facility in Ohio in the US, saw its earnings before interest, tax, depreciation and amortization (EBITDA) loss narrow sequentially in the March quarter helped by an improvement in sales realisations. At its Plate and Pipe Mill in Texas, the company's EBITDA rose quarter-on-quarter, also helped by higher realisations. Both units also saw an improvement in their capacity utilisations in the March quarter compared to the December quarter, and the management was confident of the performance improving further.
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"Volumes have picked up, the prices have improved, and we do expect that going into this year, we should see positive contributions from overseas, especially US," Swayam Saurabh, chief financial officer of JSW Steel, said on a call to analysts recently.
The Ohio unit produced 810,000 tonnes of steel in fiscal 2025, accounting for around 3% of the total crude steel produced by the company. "The company will see a positive impact, but it will be very marginal, so not significant in the larger scheme of things," said an analyst, not wishing to be identified. The other company which could potentially benefit from these tariffs is
Hindalco Industries
, which has a US-based subsidiary Novelis, and manufacturing units in the region.
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While Novelis did see an improvement in its net income and adjusted EBITDA per tonne on a sequential basis in the March quarter, analysts said the company's guidance has seen a marginal shift.
While the management indicated that they were confident of getting exemption on the import duties in February, in May, Novelis' CEO Steve Fisher said a 'neutral to positive' impact was expected considering certain trade deals between countries were bound to happen.
"We think that there will be a USMCA 2.0," he told analysts in May. "As soon as we have some of those (deals), particularly the USMCA 2.0, we will be going in that direction. So, you have to take this negative impact as something for the time being," he said.
The USMCA is a free trade agreement that came into effect in 2020 between the US, Mexico and Canada. After Trump came to power in January this year, steel and aluminium were one of the earliest to be subjected to tariffs.
"This is more of a sentiment thing because, if you see, there was not much of an impact even the last time, as steel safeguard duties helped offset the impact," another analyst said. On Monday, shares of
Hindalco Industries
, Jindal Steel and Power, Vedanta, Tata Steel and JSW Steel ended up 0.4-1.5% lower on the NSE while the Nifty 50 ended 0.1% lower.
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