Tata Steel, SAIL, JSL gain up to 3% in trade today. Are they worth your money?

The Government announced the imposition of a 12% provisional safeguard duty on certain steel products to protect the domestic industry from injury due to a recent spike in imports of such products.

Tata Steel, JSW Steel, Steel Authority of India (SAIL), Jindal Stainless (JSL) and Jindal Steel and Power (JSPL) gained between 1 per cent and 3 per cent in intra-day trade on Tuesday.

 

However, in the past six months, the metal index has declined 7 per cent, as against less than 1 per cent fall in the benchmark indices.

 

Why are steel stocks rallying on April 22?

 

The Ministry of Finance on Monday announced the imposition of a 12 per cent provisional safeguard duty on certain steel products to protect the domestic industry from injury caused by a recent spike in imports of such products. 

 

 

What is safeguard duty?

 

The government has also imposed a provisional safeguard duty of 12 per cent on specific steel imports (flat steel) for a period of 200 days, effective from April 21, 2025. 

 

This duty will be applicable on imports of hot rolled plate mill plates, cold rolled coils and sheets, metallic coated aluminium magnesium, and colour coated coils and sheets.

 

However, the developing countries (except China and Vietnam) will be exempt from this safeguard duty. This is a blanket duty on almost all imports of flat steel in the country.

 

A safeguard duty is a temporary tariff barrier imposed by a country to protect its domestic industry from a surge in imports.

 

ICICI Securities on steel stocks

 

This is a positive development for domestic steel players, as the imposition of safeguard duty will help curb cheap steel imports, which has increased to 9 years high of 9.5 million tons (MT) in FY25, with ~70 per cent of these imports coming from China, South Korea, and Japan. This surge has led to a decline in domestic steel prices, which fell to years low of ~₹47,000/ton, ICICI Securities said in a note.

 

The ongoing recovery in domestic steel prices, along with lower raw material prices, is expected to support margin expansion for domestic steel players starting from Q1FY26. 

 

ICICI Securities remains positive on the domestic steel sector, with preference on JSW Steel and Jindal Steel and Power, owing to their strategic capacity expansion, strong domestic demand outlook, and improving profitability prospects. 

 

This news also has positive implications for steel players not under the brokerage firm’s coverage namely SAIL and Tata Steel, which can offer double digit returns from the current market price.

 

Elara Capital on steel sector

 

The 12 per cent safeguard duty on flat steel products may support domestic prices in the short-term. However, upcoming capacity additions could weigh on the sustainability of price hikes. 

 

In the medium term, concerns around oversupply —domestic and global — and slowing global GDP amid tariff uncertainty, and the possible devaluation of yuan could put pressure on the steel industry. 

 

Nonetheless, falling coking coal and iron ore prices may offer partial margin relief, Elara Capital said.