On March 19, the stock market witnessed a significant boost in steel company shares, including Tata Steel, JSW Steel, and NMDC Steel. This surge followed the recommendation from the Directorate General of Trade Remedies (DGTR) for a 12% safeguard duty on specific steel product imports. The move aims to protect the domestic industry from overwhelming foreign competition, and it has resulted in increases of up to 7% for several key players in the sector.
Steel Stocks Experience Significant Gains
Investors were thrilled as NMDC’s share price rose by 7.35%, reaching ₹36.07 per share. Similarly, SAIL saw an increase of 3.54%, pushing its shares to ₹112.75. Other notable gains included:
- Tata Steel: Up by 2.5% to ₹158.50
- Jindal Steel & Power: Increased by over 1%
- APL Apollo Tubes: Climbed by 1.7% to ₹1,457.80
This collective rise in steel stocks resulted in the Nifty Metal index gaining more than 1%, making it one of the top-performing sectoral indices on the National Stock Exchange (NSE) that day.
Understanding the Safeguard Duty Recommendation
The DGTR proposed a 12% temporary tax for a period of 200 days on certain imported steel products to address what they termed as "serious injury" to the domestic steel industry. The products affected by this safeguard duty include hot-rolled coils, steel sheets, and cold-rolled coils.
Interestingly, domestic flat steel prices have surged by 5% over the past month, contrasting with a downturn in regional prices. According to a report from Kotak Institutional Equities (KIE), this increase has been largely fueled by the impending safeguard duty.
Implications for Steel Pricing
KIE’s report suggests that the rising trade actions in various regions have applied pricing pressure on exporting nations like China. While Chinese export prices have dropped by 3% year-to-date, domestic hot-rolled coil (HRC) prices in India have soared by 7%, creating a 7-8% premium over import parity.
Analysts from CLSA project that the imposed temporary tax could potentially elevate steel prices by ₹2,100 per tonne, indicating a significant shift in the market dynamics.
Final Thoughts
The recommended safeguard duty represents a crucial step toward supporting India’s domestic steel industry amid international competition. As steel stocks continue to rally, investors are keenly watching how this situation develops and impacts both pricing and market stability in the months to come.
For those interested in additional market insights, check out our articles on the sugar sector surge and Tata Motors’ recent performance.
