India Raises Steel Export Duties to Curb Domestic Price Hikes

I. Official Notification & Core Policy Details (February 22, Revenue Department, Ministry of Finance, India)

II. Three Core Drivers Behind the Policy

1. Domestic Inflation & Infrastructure Supply Security Pressures

   From January to February 2026, the domestic spot price of HRC in India surged past INR 68,000 per tonne (approx. USD 810 per tonne), a 12% year-on-year increase and a three-year high. To ensure low-cost steel supply for the “Make in India” initiative and the national infrastructure plan PM GatiShakti, the Indian government moved to expand domestic supply by restricting exports.
2. Countering “Passive Domestic Diversion” Amid EU CBAM and US Tariffs

   With the European Union’s CBAM fully implemented in January 2026 and import quotas tightened, India’s steel exports to Europe (accounting for 65% of its total exports) faced an expected decline. Meanwhile, the US doubled its steel and aluminum tariffs to 50% on February 23, virtually closing the US export window for Indian steel. The government’s pre-emptive intervention aims to avoid domestic inventory backlogs and price collapses caused by export disruptions.
3. Risk of Global Price Inversion Post-Chinese New Year

   During China’s Spring Festival, international steel prices (e.g., Southeast Asian CIF at USD 520–540 per tonne) were lower than domestic Indian prices, creating arbitrage incentives for Indian steel mills to “export at low prices while selling domestically at high prices”. This policy is designed to close the price gap and stabilize the domestic market.

III. Immediate Market Impact & Restructuring of Trade Flows

(1) Reactions from Indian Steel Mills

• Overhaul of Order Acceptance Strategies: Major players like Tata Steel and JSW Steel have suspended export quotations for February–March, prioritizing the fulfillment of domestic long-term contracts.
• Diversion of European Orders: Approximately 200,000 tonnes of HRC originally scheduled for shipment to Antwerp, Belgium, in March have been reallocated by mills to supply a refinery project in Gujarat, western India.

(2) Shifts in the Global Trade Landscape

1. Southeast Asia: China and Russia Step in to Fill the Gap

   India holds an 18% share of the Southeast Asian HRC market. The tariff hike has increased its export costs by USD 40–80 per tonne, eroding its price competitiveness. Chinese (current Southeast Asian CIF at USD 520 per tonne) and Russian (USD 510 per tonne) steel mills have received urgent inquiries from Thailand and Vietnam, with March shipment volumes expected to rise by 10–15% month-on-month.
2. Middle East: Iran and Turkey Benefit

   India accounts for 25% of rebar exports to the Middle East. Following the tariff increase, Iranian rebar (CIF at USD 550 per tonne) and Turkish sections are poised to capture infrastructure orders in Saudi Arabia and the UAE.
3. Africa: India Retrenches to Traditional Strongholds

   Leveraging lower transportation costs, Indian steel mills plan to shift their export focus to East Africa (Kenya, Tanzania) and South Africa, avoiding competition in high-tariff regions.

IV. Trend Forecast for the Next 3–6 Months

1. Domestic Prices: India’s domestic HRC prices are expected to stabilize in the range of INR 65,000–67,000 per tonne, a 3–5% decline from pre-policy levels, effectively easing cost pressures on downstream manufacturing.
2. Export Volumes: India’s steel export volume in the 2026 fiscal year (April 2026–March 2027) is projected to drop from the anticipated 12 million tonnes to 9 million tonnes, a decrease of approximately 25%.
3. Policy Dynamics: If international steel prices surge sharply (exceeding USD 600 per tonne) or domestic demand becomes saturated, the Indian government may launch a review of tariff reductions in the April new fiscal year.

V. Implications for Chinese Foreign Trade Enterprises

1. Quotation Window: The next two weeks (February 24–March 10) will be a peak period for order diversion among Southeast Asian and Middle Eastern customers. It is recommended to launch “Indian supply substitution solutions” targeting India’s traditional clients to lock in Q2 long-term contracts.
2. Risk Alert: Indian steel mills may attempt to evade tariffs through under-invoicing or batch splitting. Vigilance is required against potential low-price dumping by Indian products in third-country markets, which could impact Chinese exports.
3. Raw Material Linkages: A pullback in India’s domestic steel prices may dampen its iron ore procurement demand (India is the world’s second-largest iron ore importer), in turn affecting global iron ore prices. Close attention should be paid to cost-side fluctuations.