Steel stocks saw a significant increase in value on Wednesday following the recommendation of a provisional safeguard duty of 12 per cent on steel imports by the Directorate General of Trade Remedies (DGTR). The duty, specifically on flat steel products, will be imposed for 200 days pending a final investigation.
The investigation was initiated in response to a complaint from the Indian Steel Association regarding a sudden surge in imports of non-alloy and alloy steel flat products in December 2024.
In response to this news, the metal stocks sectoral index rose by 1.27 per cent to close at 9,148.55. Companies like SAIL, Hindustan Zinc, NMDC, Tata Steel, JSW Steel, and Jindal Stainless Steel were among the top gainers in the Nifty metal category.
Tata Steel shares led the gainers in the Nifty 50 components, rising by 2.51 per cent to close at ₹158.54 on the NSE. SAIL shares also performed well, ending 3.98 per cent higher at ₹113.15 after reaching an intraday high of ₹114.40. NMDC and JSW Steel also registered gains, with increases of 3.47 per cent and 1.27 per cent, respectively.
Analysts from various brokerages reacted positively to the news of the safeguard duty, stating that it could provide short-term price support to the sector. They highlighted the anticipation of the duty leading to an increase in domestic steel prices. Moreover, they emphasized the need for such a measure and its potential positive impact on the industry.
Brokerages like Kotak Institutional Equities and JP Morgan expressed optimism about the Indian steel sector, with JP Morgan specifically noting that the duty could raise import costs by ₹5,500 per tonne. They also provided insights into the preferred picks within the sector, with Tata Steel and JSW Steel standing out as top choices.
In addition to the positive outlook on steel stocks, concerns were raised about mining taxes and capacity additions in the sector. State taxes on mining, increased taxes in certain states, and proposed tax hikes in Karnataka were highlighted as potential risks to mining margins for companies like NMDC, SAIL, and Tata Steel.
Furthermore, the potential oversupply scenario resulting from upcoming capacity additions could put downward pressure on steel prices in the medium to long term, according to analysts. Despite these challenges, brokerages remained positive on certain steel companies, suggesting that pricing will depend on the domestic demand-supply situation.
Overall, the news of the safeguard duty recommendation had a positive impact on steel stocks, driving optimism in the sector and prompting analysts to reassess their recommendations and target prices for companies within the industry.
