Safeguard duty provides short term relief for steel cos

The duty is essential to shield the domestic industry from volatile price shocks, ensuring revenue stability and operational viability amid challenging headwinds and significant domestic capacity expansion, said Jalan

The fresh price-based safeguard duty of 11-12 per cent for three years levied on steel will help stabilise domestic prices and protect the industry from imports given the weak global demand and pricing scenario.

According to Finance Ministry notification, a 12 per cent duty will be imposed in the first year (till April, 2026). The rate will be reduced to 11.5 per cent in the second year (till April 2027) and further to 11 per cent in the third year (till April 2028).

The government has included a price-based exemption mechanism. For instance, no safeguard duty will be applicable if imports are priced at $675 a tonne for hot-rolled coils and $824 a tonne for cold-rolled coils. This provision ensures that fairly-priced imports are not penalised and help maintain downstream supply stability.

After spiking to ₹52,850 a tonne in April following the first round of safeguard duty, domestic HRC prices dipped progressively to ₹49,500 a tonne by September and further to ₹46,000 a tonne in November. In fact, domestic HRC prices are currently trading below import parity, reflecting persistent supply-side pressures.

Sumit Jhunjhunwala, Vice President, Sector Head, Corporate Sector Ratings, ICRA said the safeguard duty underscores the Government’s intent to shield the domestic steel industry from global supply imbalances.

While Chinese HRC prices declined 8 per cent y-on-y in 9 months of FY’26 to around $465 a tonne, the prevailing safeguard duty ensures that current domestic HRC prices are at discount of $35-40 a tonne, providing support to the domestic producers, he said.

However, if Chinese HRC prices were to fall below $435/tonne, the protective impact of the safeguard duty would materially weaken, he added.

safeguard duties

Sandeep Kumar Jalan, Co-founder & Managing Director, A-One Steel India said the imposition of safeguard duties is a necessary and calibrated response to a distorted global steel trade.

The duty is essential to shield the domestic industry from volatile price shocks, ensuring revenue stability and operational viability amid challenging headwinds and significant domestic capacity expansion, he added.

Naveen Mathur, Director – Commodities and Currencies, Anand Rathi Shares and Stock Brokers said the duty sets a minimum price for imports, but if international prices drop sharply by 20-25 per cent, the landed cost will be lower than domestic prices even with 12 per cent safeguard duty.

“Overall, this duty is a short-term strategy, not a long-term fix. It gives mills some temporary relief, but it cannot counter a major global demand downturn,” he added.

Ankit Hakhu, Director, Crisil Ratings said the medium-term protective measure is expected to support the earnings of domestic primary steelmakers, bringing their profitability in line with historical averages.

With recently commissioned capacities and further additions in the pipeline, reduced imports and stable prices will be crucial for maintaining healthy utilisation rates. However, a further sharp decline in global prices could erode this buffer and compress margins, he added.

Published on December 31, 2025