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Informist, Wednesday, Apr. 23, 2025

MUMBAI – The imposition of 12% safeguard duty on some steel products imported to the country could provide respite to domestic primary steelmakers grappling with the pressure of low-cost imports, CRISIL Ratings Ltd. said in a release. The earnings before interest, tax, depreciation, and amortisation per tonne of these steelmakers is expected to recover by INR 1,000–INR 1,300 in financial year 2025-26, it said.

"The domestic steel realisations were at around 5% premium vis--vis imports for most parts of the last two fiscals. This premium was on an uptrend in the last quarter of fiscal 2025, due to healthy domestic demand and in anticipation of the safeguard duty, while global prices continued to decline. However, with 12% safeguard duty in place, the domestic producers will now have some respite," Ankit Hakhu, director at CRISIL Ratings, said.

In FY25, average domestic flat steel realisations fell around 10% on year, pulling down the EBITDA per tonne to below its decadal average of around INR 10,000 per tonne. This was because global headwinds such as subdued demand in China and trade restrictions in Europe and the US had heightened global oversupply and pricing pressures, according to the release. The rating agency analysed five major steel producers, accounting for around 60% of the domestic capacity.

Meanwhile, the landed cost of imports could decline, even after the safeguard duty, if global steel prices weaken amid persistent oversupply and rising trade protectionism. This could limit the ability of Indian players to take additional hikes, the release said. However, favourable cost of production will offer some margin support. In FY25, domestic iron ore prices were mostly steady and may remain in a range going forward, it said. However, coking coal prices, which fell around 26% on year, are expected to remain soft.

"While the safeguard duty and favourable cost of production will prop up operating profitability in fiscal 2026, domestic utilization will also have to keep pace with the capacity additions. Healthy domestic demand growth in fiscal 2026, which is expected to be higher than global average, will drive volume growth and margin recovery to around INR 10,500- INR 11,000 per tonne," Ankush Tyagi, associate director at CRISIL Ratings, said.  End

Reported by Ashutosh Pati

Edited by Avishek Dutta

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