New Delhi/Mumbai: Prices of steel in the domestic market have climbed 3-4% in recent weeks on expectations of imposition of a 15% safeguard duty on the import of the crucial alloy, sparking concerns of cost inflation for user industries such as consumer durables, automakers, as well as infrastructure and real estate companies.
Mint reported last week that the Directorate General of Trade Remedies (DGTR) has recommended 15% safeguard duty on import of steel to protect domestic industry from cheap imports. While an official announcement to the effect is yet to be made, Darpan Jain, the director general of trade remedies, told Mint on Monday that it is under consideration.
Analysts expect that a 15% safeguard duty could translate to a similar hike in domestic steel prices. This is because prices of local steel are closely linked to the global prices of the alloy.
Industries that use steel as an input have opposed such a duty, arguing that their raw material bills will become steeper.
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“The duty must be there to protect the Indian industry and Indian manufacturers to make them globally competitive, but this duty should be there on finished products, not on raw materials,” said Ravi Saxena, CEO and founder of Wonderchef, a manufacturer of stainless-steel kitchen utensils.
Saxena added that if the raw materials themselves become more expensive, then “we will never be able to add value and become globally competitive. The only outcome will be that Indian consumers will end up paying more”.
The DGTR had launched an investigation in December into alleged dumping of steel in India by foreign companies following a complaint by domestic steelmakers. Local steel prices had fallen to the lowest levels in four years due to competition from cheaper imports.
Rising steel prices
Prices of benchmark hot-rolled coil (HRC) steel in the domestic market firmed up by 3-4% over late February and early March to reach ₹49,000 per tonne ex-Mumbai, the highest since August 2024, as per data from BigMint, a market intelligence firm.
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“In late February and early March, market speculation over the possible implementation of a safeguard duty drove a sharp rally in HRC and other flat steel product prices,” analysts at BigMint said. “However, in the absence of an official announcement from the government, the initial surge has begun to lose steam.”
Analyst expectations
“The speculation around a potential 15% import duty on steel has stirred market sentiment, leading to volatility in pricing dynamics. If implemented, such a measure could provide short-term relief to domestic producers by curbing imports at lower prices,” BigMint analysts said.
Ajay Srivastava, founder of New Delhi-based think tank Global Trade Research Initiative (GTRI) advised against a blanket safeguard duty on the import of steel.
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“Steel is not a homogeneous product, and any safeguard duty impacts various steel products differently. Commodity prices operate on a demand and supply basis. When it is certain that certain types of steel will not be imported, the industry takes advantage of this and raises the prices of essential construction materials,” he said.
India remains the only major economy with healthy growth in steel consumption, growing 9-10% annually as per the steel ministry’s estimates. Overseas steelmakers are directing their excess production to India as demand from other major steel consumers slows down.
Steel imports grew by a fifth between April and December 2024 to 7.3 million tonnes, led by a sharp growth in shipments from South Korea, China and Japan. Meanwhile, exports contracted by a fourth during the same period to 3.6 million tonnes, making India, the second largest maker of steel globally, a net importer of the alloy.
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