Proposed safeguard duty on steel: Analysts assess potential impact

Market experts see the potential safeguard duty on flat steel products as a positive for domestic steelmakers, with stocks like JSW Steel, Tata Steel, and Steel Authority of India (SAIL) gaining traction in anticipation.The Directorate General of Trade Remedies (DGTR) has proposed a 12% safeguard duty on certain steel products for 200 days to protect local manufacturers from cheaper imports. However, the measure is yet to be notified by the Finance Ministry.

Parthiv Jhonsa, Lead Analyst for Metals and Mining at Anand Rathi Institutional Equities said that if imposed, the duty would help local steel producers counter imports from China and Free Trade Agreement (FTA) countries.

“With this 12% coming in, you can further expect close to about ₹2,000 to ₹2,500 price hike in the very near term,” he said, citing historical trends where such duties led to a 10-15% increase in prices.

Analysts expect higher steel prices, stable iron ore costs, and lower coal expenses to improve profitability for domestic manufacturers. Jhonsa estimates that earnings before interest, taxes, depreciation, and amortisation (EBITDA) per tonne across the ferrous sector could improve by around 10% over the next couple of quarters.

Also Read: Steel companies set for higher per tonne earnings, says analyst

Among steelmakers, Jhonsa highlighted that Tata Steel is likely to benefit the most, with 76% of its portfolio comprising flat products, followed by JSW Steel (71%) and SAIL (60%).

JSW Steel, Tata Steel, and SAIL are his top picks along with MOIL, which supports the sector through raw material supply.

Meanwhile, Rajesh Ravi, Institutional Research Analyst at HFC Securitiessaid that the proposed 12% duty could help stabilise steel prices if implemented.

“With these safeguard duties and China looking to cut down production, we believe steel prices could see a 2-3% incremental hike, which would be good news for Indian steel companies,” he said.

Also Read: Tata Steel CEO flags risks from US trade policies on steel sector

Ravi added that HDFC Securities is positive on JSW Steel and Jindal Steel and Power (JSPL).

Manish Sarda, Director of Sarda Group said the safeguard duty is a sentiment boost for the steel industry but would not directly impact their business since it mainly applies to flat products.

“Frankly speaking, this Directorate General of Trade Remedies (DGTR) 12% move is to protect the local steel industry, our domestic steel industry. Overall, it will not directly impact us, but the sentiment in the steel industry will be good,” said Sarda.

For the entire interview, watch the accompanying video

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