India recommends 12% safeguard duty on steel imports for 200 days

India's Directorate General of Trade Remedies has recommended a 12% provisional safeguard duty on imports of non-alloy and alloy steel flat products for 200 days, citing injury to the domestic industry from cheaper imports.

According to a DGTR document of preliminary findings dated March 18, safeguard duty is proposed for key steel products, including hot-rolled coils, sheets and plates, HR plate mill plates, cold-rolled coils and sheets, metallic-coated steel coils and sheets and color-coated coils and sheets. The safeguard investigation was initiated by DGTR on Dec. 19.

The duty will apply to imports from China and Vietnam, as these countries account for over 3% of total steel imports into India. Imports from other developing countries will be exempt, as their individual contributions are below this threshold.

DGTR has also proposed that the duty will not apply to steel products priced above certain thresholds to mitigate injury risks and ensure fair selling prices. These thresholds are set at or above $675/mt CIF for HR coils, sheets and plates; $695/mt CIF for HR plate mill plates; $824/mt for CR coils and sheets; $861/mt for metallic-coated steel coils and sheets; and $964/mt for color-coated coils and sheets.

The proposed duty is expected to bolster domestic steel prices, which have recently lingered at multiyear lows due to an influx of cheaper imports and high inventory levels among domestic mills.

"Chinese steel imports already attracted a basic customs duty of 7.5%, and now, with the added 12%, they will become unviable," a west India-based trader said. The trader further added the safeguard duty also brings relief as Vietnamese steel imports will also become expensive.

Recent Bureau of Indian Standards approvals for Vietnamese mills have heightened concerns in the domestic market, which has struggled with cheaper imports in recent years.

According to Joint Plant Committee data, total steel imports from China reached 2.3 million mt during April to January 2024-25, approximately 6% higher year over year, while imports from Vietnam stood at 678,400 mt, about 2% lower year over year for the same period.

"[The safeguard duty] will deter the imports. Now no one is going to import which is a good sign for the industry," a north India-based trader said, adding domestic prices are likely to hold now.

Platts assessed the spot price of IS2062, 2.5-10 mm thick hot-rolled coil, excluding an 18% goods and services tax, at Rupees 50,000/mt ($578/mt) ex-works Mumbai on March 18. Notably, HRC prices were at Rupees 46,500/mt on Sept. 26, 2024, marking the lowest level in nearly four years since the previous low of Rupees 45,750/mt recorded on Nov. 18, 2020, according to Platts data.

However, some market participants held mixed views, as the duty is still a recommendation, and the final decision is pending and will likely take a while to be announced.

Two distributors based in Mumbai indicated that mills are likely to raise their list prices for April by Rupees 1,500-2,000/mt, with retail prices expected to find a floor at Rupees 50,500/mt.

The DGTR highlighted that the surge in steel imports into India has been largely driven by global trade diversion, triggered by protective measures in major economies. The US has imposed protective measures that have significantly contributed to the surge in imports. To counteract this trade diversion, the EU imposed a 25% safeguard duty in 2018. Other regions, including Canada, the UK (post-Brexit) and Morocco, have also implemented similar duties, while Mexico raised customs tariffs from 25% to 50%.

Several nations, including South Africa, Turkey, Vietnam, Malaysia and Gulf Cooperation Council countries, have also tightened import restrictions to prevent an influx of redirected steel. With multiple global markets closing their doors, surplus steel has increasingly flowed into India, intensifying competitive pressure on local producers.

The DGTR has invited industry comments within 30 days and will hold an oral hearing before making a final determination.