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DGTR recommends 12% provisional safeguard duty for 200 days; likely to benefit the steel sector

* The Directorate General of Trade Remedies (DGTR) has recommended imposing a provisional safeguard duty of 12% for 200 days. This duty will be levied on hot/cold-rolled coils, sheets, and plates, including HR Plate Mill Plates, metalliccoated steel (zinc, aluminum-zinc, or zinc-aluminum-magnesium), and colorcoated steel.

* DGTR has also recommended a price-based exemption to the proposed safeguard duty. Specifically, imports of HRC/CRC (sheets, plates) and coated steel will be exempt from the duty if their CIF import prices meet the specified thresholds: USD675/t, USD824/t, and USD964/t, respectively.

* The imposition follows an ongoing investigation into the dumping of cheap imports into India, which is affecting domestic steelmakers. This measure aims to protect domestic producers while allowing the continuation of VAP imports.

* This development is expected to benefit steelmakers, especially those with a high share of flat steel products, as they were most impacted by increased imports into India at lower prices. During Apr-Feb’25, India's steel imports stood at ~9mt (+16% YoY). In contrast, exports during the same period declined 34% YoY to 4.4mt. The share of finished flat steel imports stood at an overwhelming +95% in 11MFY'25, with the remainder consisting of semi-finished and finished long products.

* With the duty in place, the landed cost of imports is expected to rise by nearly INR5,000/t, potentially leading to reduced imports at lower prices. Prior to the duty, domestic prices were at a premium to the landed cost of imports by nearly 5-7%. However, with the duty in place, domestic prices are likely to be at a discount to the landed costs, creating room for further price hikes.

* As a result, we may see domestic prices increase further, following the price hikes already implemented. In Feb’25, steel mills implemented a price hike of INR1,500-2,000/t. Due to this new development, an additional price hike of INR1,000-1,500/t is expected in the near term.

* We expect JSW Steel, Tata Steel, and SAIL to benefit the most, as they have a high share of flat steel products in their portfolio. Although the duty is proposed to be implemented for 200 days and will be reviewed thereafter, it is expected to improve realizations and earnings in the near term.

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