Metal Stocks Surge Up to 5% as India Considers Safeguard Duty on Steel Imports

Shares of several domestic metal companies surged by up to 5% on February 13 following remarks by Steel Minister HD Kumaraswamy regarding the potential implementation of safeguard duties on low-cost steel imports, particularly from China.

India may introduce a temporary tariff on Chinese steel within the next six months due to the growing threat posed by inexpensive imports to domestic producers, Reuters reported, citing the minister’s statements in an interview.

“Rising steel imports from China, often supported by unfair trade practices, present a significant challenge to Indian manufacturers,” Kumaraswamy stated in an interview late Tuesday. “The government remains committed to safeguarding the Indian steel industry,” he added.

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Market Reaction and Stock Performance

On February 13, the Nifty Metal index climbed nearly 2%, with SAIL's shares leading the surge, rising 5% to ₹111.3 per share.

At 1:25 PM, Tata Steel’s share price were up 3.6% at ₹137.03 per share, while Jindal Steel’s share price increased by 2.6% to ₹850 per share. The share price of JSW Steel and NMDC gained 2% and 1.8%, respectively. Meanwhile, the share price of Hindalco, NALCO, and Hindustan Copper were trading over 1% higher.

The anticipation of safeguard duties has fueled optimism among investors, as such measures could help stabilize steel prices and protect domestic producers from unfair competition. Analysts suggest that if the government follows through with these protective measures, it could lead to improved profitability for Indian steelmakers in the coming quarters.

Policy Measures and Government’s Strategy

“Following ongoing investigations, safeguard duties ranging between 15-25% are being considered to prevent unfair competition and establish a level playing field,” the minister stated.

The government is also actively monitoring global steel trade trends and may introduce further policy interventions if necessary. Industry experts believe that while safeguard duties could provide short-term relief, long-term solutions must include capacity expansion, technological upgrades, and enhanced competitiveness of Indian steel manufacturers.

India became a net importer of finished steel in the fiscal year ending March 2024, with Chinese steel imports hitting a record high between April and December.

Despite strong local demand driven by rapid economic expansion and increasing infrastructure investments in the world’s fastest-growing major economy, domestic steel prices have declined.

Diversification of Raw Material Sources

Additionally, Kumaraswamy highlighted India’s efforts to diversify sources of steel-making raw materials such as coking coal, with an eye on countries including Canada, Russia, Mongolia, Mozambique, and the United States.

For the past decade, Australia has been India’s primary supplier of coking coal, accounting for around 80% of total shipments. However, its share fell to 62% in 2024 as India expanded imports from the U.S., Russia, and Mozambique.

The government is keen on reducing dependency on a single source to ensure a stable and cost-effective supply of raw materials. By securing alternative suppliers, India aims to mitigate risks associated with supply chain disruptions, price volatility, and geopolitical uncertainties.

Outlook for the Steel Industry

Looking ahead, industry stakeholders remain cautiously optimistic about the Indian steel sector’s prospects. While external challenges such as global demand fluctuations and trade policies of major economies continue to pose risks, government interventions and strong domestic consumption are expected to support growth.

Analysts predict that if safeguard duties are implemented effectively, domestic steelmakers could regain pricing power, leading to better margins. Moreover, infrastructure projects, real estate expansion, and manufacturing growth are likely to keep steel demand strong.

Overall, while the sector faces immediate challenges, proactive policy measures and strategic diversification of resources are expected to bolster the long-term stability of the Indian steel industry.