The steel ministry of India has reportedly proposed to the Finance Ministry to impose duties on steel imports. The proposed safeguard duty stands at 25%, and aims to restrict the cheap steel imports that have been impacting the Indian industry for several months now.
The potential imposition of these duties could help restrict imports over the medium term and allow players to take a price hike, Nuvama Research said.
Impact Of Potential Duties On Steel Imports
If imposed, the safeguard duties on steel imports could be lower than 25%, according to Nuvama said. These duties could restrict India's steel imports in the medium term.
Additionally, potential duties, coupled with a seasonally good quarter, could allow Indian steel players to take a price hike ranging from Rs 2,000 to Rs 2,500 per tonne, within the next month itself, according to the research firm. This, as current domestic hot rolled coil prices are trading at a 2% discount to the landed cost of imports.
Book Profits Says Nuvama
The current stock prices of Indian steel companies have already factored in earnings improvement, according to Nuvama. This gives investors a chance to book profits in steel stocks like JSW Steel Ltd., Steel Authority of India Ltd. as well as Tata Steel Ltd.
Jindal Steel & Power Ltd. remains the brokerage's top preferred pick in the space
Falling Exports A Bigger Concern
Nuvama argues that India's falling exports are a bigger concern than the elevated import levels. The brokerage states that China's aggressive exports touched an all time high of 11.8 million tonnes in October 2024. This is eating into India's steel export potential.
Due to the fact that large steel players like Tata Steel, JSW Steel and JSPL have recently commissioned their respective steel plants with total capacity of 17 million tonnes per annum, Nuvama expects India to have excess hot rolled coil supply over the next two years. It projects India's incremental steel production to be flat at 21 million tonnes over FY25–27.
Given this supply scenario, India needs the export market to push additional volumes, according to the research firm. This can only be possible if China dials down exports.
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