Safeguard Duty to Offer Relief of Rs 1,000-1,300 per Tonne to Primary Steel Producers: Report

New Delhi, April 22 (NationPress) The government's move to enforce a 12 percent safeguard duty on specific categories of flat steel imports for 200 days may provide significant support to domestic primary steel producers facing challenges from low-cost imports, according to a report by Crisil published on Tuesday.

Thanks to this duty intervention and favorable input costs, the Ebitda per tonne for domestic primary steel manufacturers is projected to rebound by Rs 1,000-1,300 per tonne in fiscal 2026.

This change is expected to alleviate the pressure on debt metrics, especially since sector leverage had escalated last fiscal year to accommodate substantial ongoing capital expenditures, as noted in the report examining five leading steel producers that represent 60 percent of the domestic capacity.

“Domestic steel realizations were at a 5 percent premium compared to imports for most of the last two fiscal years. This premium saw an upward trend in the final quarter of fiscal 2025, driven by robust domestic demand and expectations surrounding the safeguard duty, while global prices continued to decline. With the safeguard duty now implemented, domestic producers will finally gain some relief,” stated Ankit Hakhu, Director at Crisil Ratings.

The diversion of steel exports from surplus nations like China, South Korea, and Japan has resulted in an influx of low-cost imports into India, negatively impacting domestic steel realizations that are influenced by the landed cost of imports.

Even after the duty, the landed cost of imports could further decrease if global steel prices weaken due to ongoing oversupply and increasing trade protectionism.

This situation may restrict Indian players' capacity to implement additional price hikes. Overall, while the safeguard duty will assist in maintaining import parity, a full normalization of price dynamics may be delayed.

In addition to lower import prices, domestic pricing may face limitations due to a projected increase in local supply stemming from new capacities. After several years of minimal additions, the industry added 10 million tonnes per annum (MTPA) in the last fiscal year, with plans for another 10-12 MTPA in fiscal 2026.

The report indicates that these capacity additions are backed by a healthy domestic demand forecast of 9-10 percent for fiscal 2026, fueled by ongoing infrastructure investments and strong demand from the building and construction sectors.

Ankush Tyagi, Associate Director at Crisil Ratings, mentioned that while the safeguard duty and favorable production costs will boost operating profitability in fiscal 2026, domestic utilization must also keep pace with the new capacity expansions.