Shares of leading Indian steel companies, including JSW Steel, Tata Steel, and Steel Authority of India Ltd. (SAIL), along with Sarda Energy, Godawari Power & Ispat, and Shyam Metalics, are expected to be in focus on Wednesday, March 19, after the Directorate General of Trade Remedies (DGTR) recommended the imposition of a 12% provisional safeguard duty on flat steel products for 200 days.
DGTR’s safeguard duty proposal
The DGTR’s notification cited a sharp surge in steel imports, which has caused and threatens to cause serious damage to the domestic steel industry. The duty covers a wide range of steel products, including:
- Hot rolled coils, sheets, and plates
- HR Plate Mill Plates
- Cold rolled coils and sheets
- Metallic coated steel coils and sheets (profiled or not)
- Colour-coated coils and sheets (profiled or not)
- Galvanneal coated steel with Zinc, Aluminium-Zinc, or Zinc-Aluminium-Magnesium
The Indian steel industry had been advocating for a higher 25% safeguard duty, but the DGTR has recommended 12% on an ad valorem basis, pending further investigation. The notification emphasized urgent circumstances where delays in implementing provisional safeguard measures could lead to irreversible losses for domestic steel manufacturers.
Brokerage views on steel sector
The announcement has drawn positive reactions from brokerages, which anticipate a favorable impact on domestic steel prices and stock movements:
- JPMorgan sees the safeguard duty as a positive for the Indian steel sector, expecting domestic hot-rolled coil (HRC) prices to rise by ₹2,000 per tonne. It also highlighted that steel stocks are rallying on multiple factors, including China’s production cuts, Germany’s infrastructure fund, and the safeguard duty. Tata Steel, JSW Steel, and SAIL are expected to benefit.
- CLSA maintains an improved outlook for metals demand, supported by China’s stimulus measures and European growth. It believes domestic steel mills will gain from the safeguard duty and has raised target prices for JSW Steel and Tata Steel.
- Emkay Global remains bullish on steel stocks, issuing a Buy call on Tata Steel (TP: ₹185) and an Add rating on JSW Steel (TP: ₹1,100). It sees the steel sector as primed for a mid-cycle recovery and prefers non-ferrous metals over ferrous metals.
The government has been balancing the interests of local steelmakers with those of downstream users, aiming to ensure affordable steel pricing while protecting domestic manufacturing. With brokerages turning positive on the sector, investors will closely watch steel stocks for potential upward movement today.
(Disclaimer: This article is for informational purposes only and does not constitute financial advice.)
