View on Safeguard Duty for Steel by Shrikant Chouhan, Head Equity Research, Kotak Securities
Below the View on Safeguard Duty for Steel by Shrikant Chouhan, Head Equity Research, Kotak Securities
Domestic flat steel prices have increased 5% in the last month against the weakness in regional prices. The divergent move is led by the widely anticipated safeguard duty, which could come in at 12% (DGTR has recommended the imposition of a 12% provisional safeguard duty for 200 days). Domestic prices are at a 7-8% premium to import parity, leaving little room for further hikes in the former case. In the past few weeks, Vietnam, South Korea, Europe and the US have imposed/increased tariff barriers against steel imports, whereas investigations are ongoing in a couple of countries, including India.
Steel margins have bottomed out in 3QFY25, and we expect a recovery in 4QFY25, with price hikes and muted costs. However, further expansion is dependent on trade measures and supply-side reforms by China. We find better risk-reward in non-integrated steel producers such as JSPL/JSTL, and remain SELL on integrated producers such as SAIL, TATA and NMDC.
Above views are of the author and not of the website kindly read disclaimer
