Steel producers worry that if the crisis persists, exports would suffer.

Indian steel producers would probably start to have serious concerns about the Red Sea crisis, which could affect exports if it continues. In addition, the crisis coincides with a period of decreased demand and fierce international competition for steel companies.

About 10-15% of the yearly production of Indian steel producers—11 million tonnes in fiscal 2020 and 18 million tonnes in fiscal 2022—was exported during the two fiscal years, with flat steel accounting for about 70% of total production. According to data from Crisil Ratings, this decreased to 6.5% in fiscal 2023 (total exports were 8.3 million tonnes) after the government implemented export tariffs.

According to the report, India's steel exports are predicted to drop to 5-7 million tonnes in this fiscal year due to lower worldwide demand and prices.

“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.