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TRUMP’S STEEL & ALUMINUM TARIFF

Background:
President Donald Trump is to impose steep tariffs on steel and aluminum. He said steel products face a 25% tariff, with 10% on aluminium goods. The value of shares in American steel manufacturers jumped significantly after the announcement.
The U.S. aluminum industry has shrunk drastically over the last 25 years, down from 23 operational smelters to five with only one of those smelters making  the high-grade stuff that the U.S. defense industry needs .

Effects On India:

  • The U.S. is the world’s largest importer of steel, significantly ahead of Germany and South Korea.
  • In 2016, the US met nearly two-thirds of its aluminium consumption from imports, and about a fourth of steel.
  • The Indian government said that India’s share of US steel imports is only 2.4%. That is true. And it is only 2% in aluminium.
  • United States of America’s imports represent 7.3% of world imports for this iron & steel, its ranking in world imports is 2.

Experts say India can be affected in two ways:

  • India may be a relatively small participant in the global export market but its exports have risen sharply in absolute terms. In April-January 2018, for instance, steel exports rose by 40.2% and India was a net exporter of steel. In aluminium, production rose between FY14 and FY17 from 1.4 million tonnes to 2.8 million tonnes, according to a Care Ratings report, but consumption rose from 1.6 million tonnes to only 1.9 million tonnes. That led to a sharp jump in exports of 57% in FY17.
  • If the US increases its output, the world is left with more metal than it anticipated. The countries exporting to the US are likely to look at other markets to sell their surplus, even at lower prices. This can lead to anti-dumping as we
    Source:Livemint.com

Analysis From The Data:

  • India’s export in Aluminium& articles have grown by 15% between 2012-2016 in United States &India’s export in iron & steel has declined by 11% between 2012-2016.
  • Share of United States in India’s export of Aluminium is 10% &Share Of United States In India’s export in Iron & Steel is 4%.
  • So we can say Aluminium Industry Of India will be more affected by Trump’s decision of implementing tariff.

Iron & Steel Industry in India

  • In FY17 (1), crude steel production in India was 72.35 MT, with the total crude steel production growing at a CAGR of 4.90 per cent over the last 5 years & reached 89.79 MT in FY16.
  • During April-January 2017, crude steel production in India grew by 7 per cent YoY & stood at 39.98 MT.
  • As of March 2017, the capacity utilization of steel producers is set to increase with strong export demand and signs of revival in domestic sales. Companies like JSW & Essar Steel have experienced a sharp increase in steel manufacturing in the last 2 months
  • Steel manufacturing output of India is expected to increase from 88.4 million tonnes (MT) in 2017 to 128.6 MT by 2021, accelerating the country’s share of global steel production from 5.4% in 2017 to 7.7% by 2021.

Market Size:

India’s crude steel output grew 5.87 per cent year-on-year to 101.227 million tonnes (MT) in CY 2017. Crude steel production during April-December 2017 grew by 4.6 per cent year-on-year to 75.498 MT.

India’s finished steel exports rose 102.1 per cent to 8.24 MT, while imports fell by 36.6 per cent to 7.42 MT in 2016-17. Finished steel exports rose 52.9 per cent in April-December 2017 to 7.606 MT, while imports increased 10.9 per cent to 6.096 MT during the same period.
Total consumption of finished steel grew by 5.2 per cent year-on-year at 64.867 MT during April-December 2017.

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