Safeguard duty implementation boosts outlook for Indian domestic steel prices

Indian domestic steel prices are expected to extend their recent rally after the government imposed a three-year staggered safeguard duty on imports of non-alloy and alloy steel flat products Dec. 30, although oversupply concerns remained.

Market participants said the imposition reinforced bullish sentiment and strengthened mills' resolve to push prices higher in January.

The imposition followed months of anticipation after the Directorate General of Trade Remedies issued its final findings Aug. 16,recommending a three-year safeguard duty, tapering from 12% in the first year to 11.5% and 11% in subsequent years.

Under the notification, the safeguard duty applied to imports from all developed countries and select developing nations that exceeded World Trade Organization thresholds. China was subject to the duty across all five flat steel product categories, while Vietnam and Nepal faced the levy on specific products.

"The safeguard implementation at year-end has come as a New Year's gift for domestic producers," a North India-based distributor said, adding that prices were already moving up and the notification would further support the uptrend.

Trade sources said mills were already planning list price hikes in January, but the safeguard confirmation could encourage a more aggressive stance. "Sellers are quite firm with their offers now," the distributor said, though he cautioned the market continued to face an underlying oversupply situation.

Earlier, India imposed a 12% provisional safeguard duty for 200 days from April 21, which expired Nov. 7. According to market participants, the notification also clarified that imports arriving between the expiry of the provisional duty and the publication of the final order would not attract any safeguard levy, removing uncertainty for shipments during that period.

Platts, part of S&P Global Energy, assessed the spot cut-to-length price of IS2062, 2.5-10 mm thick HRC, excluding the 18% goods and services tax, up Rupee 300/mt day over day at Rupee 50,300/mt ($560/mt) ex-works Mumbai Dec. 31. Platts assessed IS1786 Fe500D/Fe550D 12-25 mm diameter rebar prices steady at Rupees 46,200/mt day over day as market participants mulled the notification.

Notably, HRC prices rose to Rupee 50,300/mt Dec. 31, up Rupees 4,300/mt from Rupee 46,000/mt Dec. 1, marking a 9.35% gain over the month, according to Platts data. A Mumbai-based distributor noted the market was bullish in December as supplies were limited, with volumes diverted to exports and OEMs, leaving the trade with tighter availability.

The tightness also prompted a pickup in restocking demand, as buyers who earlier expected further price corrections returned to the market after being caught off guard by the sharp uptick.

Rebar prices rose to Rupees 46,200/mt ex-works Raipur Dec. 31, up Rupees 3,500/mt from Rupees 42,700/mt Dec. 1, according to Platts data, marking an 8.2% gain over the month. Raipur-based traders noted cost pressures pushed rebar offer levels higher, which in turn spurred buying interest in the market.

A Mumbai-based trader said the safeguard notification was the latest in a series of policy measures supporting the domestic steel industry. "This will add to the ongoing bullishness, with HRC prices possibly moving toward Rupees 52,000-53,000/mt in the coming days," the trader added, while cautioning that sustained gains would require demand-side support.

"The market is already on fire, and this news has added fuel," another Mumbai-based distributor said, noting that retail prices had already crossed Rupees 50,000/mt.

"These levels should hold for now, but we need to closely monitor how supply shapes up in the next one to two months," the distributor added.

However, several participants warned the underlying issue of oversupply has not disappeared. "Safeguard duty is a safety net against cheap imports, but ultimately supply and demand need to balance," the North India-based distributor said, adding that stronger exports could help absorb excess volumes.