The Red Sea crisis is likely to emerge as a grave concern for Indian steel manufacturers, with potentially impacting exports if the issue persists. The crisis also comes at a time when steel companies are facing lower demand and stiff competition from other countries.

Between fiscals 2020 and 2022, Indian steel makers exported about 10-15% of their annual output (11 million tonnes in fiscal 2020 and 18 million tonnes in fiscal 2022), with flat steel comprising around 70%. This declined to 6.5% in fiscal 2023 (total exports were 8.3 million tonnes) after the government imposed export duties, as per Crisil Ratings’ data.

India’s steel exports are expected to decrease to 5-7 million tonnes in this fiscal year, influenced by subdued global demand and prices, the data stated.

“The freight operators are hesitant to commute through the channel, even if we offer to double the shipping charges. Most of our order wins would possibly take another six more months to come into execution mode. So, if the crisis lingers or becomes a more permanent problem, we will have to find alternate solutions including taking longer routes,” L&T CFO R Shankar Raman said.