Shares of all steel companies including Tata Steel Ltd. and JSW Steel Ltd. advanced during early trade on Wednesday after the government proposed a 12% safeguard duty on certain steel imports.
The Ministry of Commerce and Industry's preliminary findings on Tuesday indicated the Directorate General of Trade Remedies' plan to impose the provisional safeguard duty for 200 days. The duty has been recommended on imports of flat products like HR coils, sheets, cold rolled coils/sheets, colour coated coils, etc.
The findings are now open for comments for 30 days, and a final decision will be announced after that.
Government-owned NMDC Steel Ltd. jumped the most by 8.3% on the news, followed by 5.8% surge in Kalyani Steels Ltd.
Industry leaders Tata Steel and JSW Steel were up over 2.8% each.
Steel Authority of India Ltd. gained nearly 3%.
Once implemented, the safeguard duties should increase the landed cost of imports by Rs 5,500 per tonne, as per analysts. This could shield Indian steelmakers from cheaper imports from places like China.
The probe came after the Indian Steel Association filed a complaint with the DGTR alleging a "recent, sudden, sharp and significant increase in imports" that has caused "injury to the domestic industry." Indian Steel Association members include leading domestic steel companies such as ArcelorMittal Nippon Steel India, JSW Steel, Bhushan Power & Steel Ltd., Jindal Steel and Power Ltd., and SAIL.
Tata Steel and JSW Steel have seen a 10-20% downgrade in FY25 earnings estimates and the safeguard duty will help revise estimates for FY26, Rajesh Ravi, senior vice president of institutional equities at HDFC Securities told NDTV Profit.
"The duty will help revive domestic steel prices which have been hurt by imports for the last two years. Reduction in China steel output will also help global steel prices. We can expect earnings upgrade for steel sector for the next thee-six quarters," he said.
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