Steel stocks gain as India plans to tax imports
March 19 (Reuters) – Shares of Indian steel companies rose on Wednesday, a day after a government body recommended a temporary tax on some steel products in a bid to curb cheap imports amid rising global trade tensions, raising hopes of a boost to the firms’ earnings.
Metal shares (.NIFTYMET), opens new tab rose as much as 1.6% in early trade in Mumbai. Industry leader JSW Steel (JSTL.NS), opens new tab and Tata Steel (TISC.NS), opens new tab rose about 3% to be among the top ten gainers on the benchmark Nifty 50 index (.NSEI), opens new tab, which advanced 0.3%. State-run SAIL (SAIL.NS), opens new tab rose 3.7%.
In December 2024, India launched a probe after record imports, largely from China, forced top steel mills to petition the government.
On Tuesday, India’s Directorate General of Trade Remedies, which functions under the federal trade ministry, recommended a 12% temporary tax for 200 days on certain steel product imports in a bid to curb “serious injury” to the domestic industry.
The tax is proposed to be levied on products including hot-rolled coils, steel sheets and plates, as well as cold-rolled coils and sheets.
Analysts at J.P. Morgan see scope for raising estimates on steel companies’ earnings as the tax “opens up ample room for imagination around profitability improvement.”
“The tax can potentially lead to more room for price hikes in the next few months after rising to 1,500 rupees to 2,000 rupees in the near term,” Parthiv Jhonsa, lead analyst for metal and mining at brokerage Anand Rathi, said.
“Earnings of steel companies are expected to increase in the next one to two quarters,” he said.
The tax is expected to help Indian steel mills counter any potential trade diversions from countries like Japan and South Korea into the South Asian country after U.S. President Donald Trump imposed 25% import tariffs on the alloy, as per commodities consultancy BigMint.