Steel Safeguard Duty: Relief for Indian Steelmakers - Crisil

New Delhi, Apr 22 (PTI) Crisil Ratings on Tuesday said that imposition of 12 per cent safeguard duty on certain steel products for 200 days will provide relief to the domestic primary steelmakers grappling under the pressure of low-cost imports.

"The domestic steel realisations were at a 5 per cent premium vis-a-vis imports for most parts of the last two fiscals. This premium was on an uptrend in the last quarter of fiscal 2025, due to healthy domestic demand and in anticipation of the safeguard duty, while global prices continued to decline.

“However, with 12 per cent safeguard duty in place, the domestic producers will now have some respite," Crisil Ratings Director Ankit Hakhu said.

The redirection of steel exports from surplus countries such as China, South Korea and Japan had led to an increase in low-cost imports into India, hurting domestic steel realisations, which are influenced by the landed cost of imports.

The landed cost of imports, even post-duty, could decline further, if global steel prices weaken amid persistent oversupply and rising trade protectionism. This could limit the ability of the Indian players to take additional hikes. Net-net, while the imposition of safeguard duty will support the import parity, a complete normalization of price dynamics may take longer.


Aside from cheaper import prices, domestic prices may be restricted by an expected increase in domestic supply from new capacities. After multiple years of limited additions, the industry added 10 million tonnes per annum (MTPA) capacity last fiscal, and another 10-12 MTPA is planned in fiscal 2026.

The players are adding these capacities on the back of healthy domestic demand of 9-10 per cent expected for fiscal 2026, on account of continued infrastructure push and robust demand from the building and construction segments.

"While the safeguard duty and favourable cost of production will prop up operating profitability in fiscal 2026, domestic utilization will also have to keep pace with the capacity additions.

“Healthy domestic demand growth in fiscal 2026, which is expected to be higher than global average, will drive volume growth and margin recovery to around Rs 10,500-11,000 per tonne," Crisil Ratings Associate Director Ankush Tyagi said.

India on Monday imposed a 12 per cent provisional safeguard duty for 200 days on five steel product categories, including hot rolled coils, sheets and plates, to protect domestic players from surge in imports.