Mumbai, March 7 Any steps to safeguard India’s steel industry would boost prices and increase the margins of domestic manufacturers, Nomura Research said in a report on Friday as the domestic industry has urged the government to clamp down on the flow of cheap imports flowing into the country.
Nomura expects a safeguard duty in the range of 10-15 per cent on steel imports. Based on a 12 per cent duty, the landed prices will be Rs 4,000 per tonne higher than the domestic spot prices, it said. "We believe the industry would be able to take a Rs 2,000 to 2,500 per tonne price hike in that scenario," the report states.
Tata Steel CEO and Managing Director TV Narendran recently said the government is considering the steel industry’s request for the imposition of anti-dumping duties very seriously as cheap Chinese imports are flooding the Indian market and the situation looks even grimmer in the wake of a possible hike in US tariffs.
Narendran said he is hopeful that the government will soon issue an update on the issue after detailed clarifications have been received from the industry.
Nomura analysts believe safeguard duty would be a better option than anti-dumping duty, as it would be easier to impose and it targets all imports including those countries with free trade agreements. "The imports from FTA accounted for 51 per cent in 2024, while those from China accounted for 30 per cent," they said.
Any increase in steel prices might provide an opportunity for domestic iron ore producers to raise prices. "We believe the price hike window is smaller for domestic producers, as with supplies resuming from Australia, global iron ore prices will soon start easing," the report states.
Nomura further stated that a Rs 600 per tonne price hike in iron ore would result in a Rs 1,000 per tonne increase in the consumption cost for converters such as JSW Steel and Jindal Steel. "Integrated players such as Tata Steel Ltd and Steel Authority of India Ltd would be better placed in such a scenario."
The Indian Steel Association (ISA) has already filed an application with the Directorate General of Trade Remedies (DGTR) on the dumping issue which is under review.
According to Narendran, India is one of the best places in the world to produce steel and the Indian steel industry has built very modern and efficient steel plants. The country was also endowed with a lot of iron ore reserves. However, the issue is the low price that foreign entities are willing to sell steel.
He pointed out that the profitability of the Chinese steel industry, is pretty much negative and most of these state-owned companies were losing money. However, in India, the steel industry is mostly private dominated and unless it is profitable, the companies will not invest in new capacity, he added.
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