Crisil Ratings Ltd. on Tuesday said that the imposition of a 12% safeguard duty on certain steel products for 200 days will provide relief to primary steelmakers in India.
Domestic steelmakers have been grappling with the pressure of low-cost imports. This is on account of the redirection of steel exports from surplus countries like China, South Korea, and Japan into India. This surge in imports has negatively impacted domestic steel prices.
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The government on Monday imposed the 12% provisional safeguard duty on five steel product categories, including hot rolled coils, sheets and plates, to protect domestic players from surge in imports.
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The move will increase the landed cost of imported steel, thereby making domestic steel more competitive. “With 12% safeguard duty in place, the domestic producers will now have some respite," said Crisil Ratings Director Ankit Hakhu.
"The domestic steel realisations were at a 5% premium vis-a-vis imports for most parts of the last two fiscals. This premium was on an uptrend in the last quarter of fiscal 2025, due to healthy domestic demand and in anticipation of the safeguard duty, while global prices continued to decline," he added.
However, it warned that despite post-duty, the landed cost of imports could decline further if global steel prices weaken due to persistent oversupply and rising trade protectionism.
This could limit the ability of the Indian companies to take additional hikes. While the imposition of safeguard duty will support the import parity, a complete normalisation of price dynamics may take longer.
"While the safeguard duty and favourable cost of production will prop up operating profitability in fiscal 2026, domestic utilisation will also have to keep pace with the capacity additions," Crisil Ratings Associate Director Ankush Tyagi said.
“Healthy domestic demand growth in fiscal 2026, which is expected to be higher than global average, will drive volume growth and margin recovery to around Rs 10,500-11,000 per tonne," he added.
(With PTI inputs)
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