Indian steel producers may get a pricing headroom of INR 6,000/mt ($70/mt) for hot rolled coil if the proposed 12 percent safeguard duty on flat steel imports is implemented, India Ratings and Research (Ind-Ra) said in a report on Friday, March 28.
It noted that the safeguard duty would cover 5.35 million mt or about 62 percent of total flat steel imports in 2023-24 and could boost realisations and support margins of large integrated mills.
According to Ind-Ra, the safeguard duty will allow domestic steel prices to rise by up to 13.2 percent, factoring in the 12 percent duty and 10 percent cess, based on February 2025 price levels.
This is expected to strengthen the credit metrics of steel companies, especially large integrated flat steel producers, by improving spreads without a commensurate increase in raw material costs, Ind-Ra said.
“The increase in steel realisation will improve domestic steel players’ spreads, as raw material prices are unlikely to increase in the same proportion considering no change in the raw material availability scenario. Moreover, debt levels are likely to reduce from fiscal 2024-25, with large industry players completing major capex to capitalise on the demand prospects for fiscal 2025-26,” it said.
