Share price of steel majors gained on reports that government is likely to impose more curb on steel imports. Government in September imposed 20 per cent import tax on some steel imports which failed to contain losses for producers.
According to market analysts, duty on minimum import price (MIP) or increase in MIP likely in next few weeks. In November steel imports declined 6.9 per cent to 0.76 mt tonnes, its first decline in almost eight months.
SBI Securities in a research report said, “We expect an upward bias in steel prices, mainly driven by curtailment in steel production across regions, including China, due to decline in spreads. We believe this curtailment will likely slow down the pace of steel exports from China. We have ‘Buy’ rating on Tata Steel and JSW Steel and have ‘Hold’ rating on SAIL. The likely revival in earnings is yet to be factored in stock price.”
The government is considering imposing safeguard duty on certain steel imports to protect the domestic industry from the surge in shipments from countries like China and Korea. Dometic steel companies, which have taken huge loans for capacity expansion, are under severe stress as cheap imports are eating into their domestic share.
Earlier, SAIL, Essar Steel, JSW Steel and Jindal Steel & Power moved the Directorate General of Safeguard for imposing levy on imports of ‘hot-rolled flat sheets and plates of alloy or non-alloy steel’ to “protect the domestic producers” from increased imports.
In September, the government imposed a provisional safeguard duty of 20 per cent on import of hot-rolled flat products of non-alloy and other alloy steel.
In August, the government had hiked import duty on base metals, including iron and steel, by 2.5 per cent, in a move aimed at helping domestic players battle out cheap Chinese imports after the currency devaluation by China.
In June, India also slapped anti-dumping duty of up to $316 per tonne on imports of certain steel products from three countries, including China.
(With inputs from agencies)