Steel Giants on the Rise: 12% Safeguard Duty Could Boost Tata Steel, JSPL, JSW Steel, and SAIL
Shares of major Indian steel companies, including Tata Steel Ltd, Jindal Steel & Power Ltd (JSPL), JSW Steel Ltd, and SAIL, have come under the spotlight today following a significant recommendation from the Directorate General of Trade Remedies (DGTR). The DGTR has proposed a temporary safeguard duty of 12% on certain steel products for a period of 200 days. This measure is aimed at curbing the rising volume of steel imports into the country, which has been putting pressure on domestic manufacturers.
In an official press release, the DGTR stated that the imposition of a 12% provisional safeguard duty is necessary to mitigate the “serious injury and threat” faced by the domestic steel industry due to increased imports. The authority believes that this temporary duty will help stabilize the domestic steel market and provide relief to local producers struggling with competitive pressures from foreign suppliers.
The move comes as several key global markets, including Vietnam, South Korea, Europe, and the United States, have recently introduced or raised tariff barriers on steel imports to protect their domestic industries. These protective measures have led to a diversion of steel exports to India, intensifying competition for domestic manufacturers. Furthermore, trade investigations related to steel imports are currently underway in a few other countries, adding to the broader uncertainty in the global steel market.
Market participants had been anticipating some form of protectionist measure for the domestic steel industry in light of these global trade developments. The proposed safeguard duty reflects the Indian government’s effort to shield the domestic steel sector from external pressures and maintain market stability amid a challenging international trade environment.
Market analysts have observed that domestic flat steel prices in India have increased by 5% over the last month, even though regional steel prices have remained relatively weak. This rise in domestic prices is largely attributed to market anticipation of a safeguard duty, which was widely expected to be set between 12% and 15% — lower than the 25% that the domestic steel industry had reportedly been lobbying for.
According to a report by Kotak Institutional Equities, domestic flat steel prices in India are currently trading at a 7% to 8% premium compared to import parity prices. This suggests that there may be limited room for further price increases in the near term if the safeguard duty is imposed at the anticipated level.
Kotak also noted that steel producers’ margins had likely hit their lowest point in the third quarter of the 2025 financial year (3QFY25), indicating that the worst phase for profitability may have passed. However, the brokerage highlighted that potential supply-side reforms in China could introduce upside risks for the global steel market, as any reduction in Chinese steel exports could tighten global supply and support higher prices.
At the same time, rising state-level taxes on mining activities in India have emerged as a growing concern for domestic miners, as these additional costs could weigh on profitability and increase production expenses.
The report further pointed out that trade restrictions on steel imports have been increasing across several regions, leading to pricing pressure for exporting countries like China. Chinese export prices have already declined by 3% so far in 2025, while domestic Hot Rolled Coil (HRC) prices in India have climbed by 7% during the same period. This divergence highlights the contrasting pricing dynamics between major exporting and importing regions, with local prices in importing countries like India seeing an upward trend despite softer global prices.
Emkay Global has noted that the current pricing environment in the steel sector remains relatively weak. However, the firm believes that investors appear to be looking beyond the present downturn, with an eye on a potential recovery in the medium term. Emkay suggests that a combination of short-term and medium-term market factors could eventually create conditions for renewed growth and improved profitability for steelmakers.
Given this outlook, Emkay has taken a neutral-to-positive stance on the steel sector, indicating cautious optimism rather than a fully bullish position. The firm favors a “selective picking” strategy, recommending a focused approach toward specific companies rather than broad-based exposure to the sector. Among steelmakers, Emkay views Tata Steel and Jindal Steel as preferred options based on their market positioning and potential for growth.
Beyond the steel sector, Emkay sees greater value in the non-ferrous metals segment compared to ferrous metals. The firm pointed out that aluminium prices are currently in a strong upward cycle, which is expected to drive positive earnings momentum and expand profit margins for non-ferrous metal producers. In contrast, valuations of ferrous metal stocks already reflect expectations of an earnings recovery, suggesting that further upside might be more limited in the steel sector.
Within its broader metals and mining coverage, Emkay highlighted Nalco, Vedanta, Tata Steel, Coal India, and Jindal Steel — in that order — as companies with attractive market positions and potential for value creation. This preference reflects the firm’s view that non-ferrous metals currently offer better growth prospects and more favorable market conditions compared to the steel sector.
