Govt measures to help large steelmakers' profitability: S&P

Government's proposed anti-dumping duty will support profitability of large domestic steel producers, ratings agency S&P said today.
"The duty will support the profitability of large domestic steel producers that have a greater proportion of hot-rolled flat steel products," it said in a note.
JSW Steel and Tata Steel will benefit the most as they have high portion of hot-rolled flat steel in their product mix at up to 60 per cent and 40 per cent, respectively.
"Combined with improving domestic demand, India's protection measures could support the average realisation and profitability of domestic steel producers," its credit analyst Vishal Kulkarni said.

He, however, hinted that this will have a limited rating impact as most of the companies are highly leveraged.
The note said the duty will most likely to replace the Minimum Import Price (MIP), which had been introduced in February this year and ends this month.

Government is mulling to impose an anti-dumping duty on imports of hot-rolled flat products of alloy and non-alloy steel from six countries, including China, Japan, and Korea, it said, explaining that the duty will be the difference between the prices of imported products and the specified floor price of USD 474-557 per metric ton.

"The anti-dumping duty will have a limited effect on domestic steel prices because local demand will have to improve for steelmakers to substantially benefit from it," its credit analyst Vishal Kulkarni said.
The note said that the domestic steelmakers have benefited from the MIP through better profits.
The agency expects global steel prices to remain volatile over next six to 12 months, and be heavily tied to China's economic outlook and added that prices had dropped 20 per cent after peaking in April, but recovered last month on demand in China.