- Imports set to become costlier by $71/tonne
- FY’25 end sees quick domestic price hikes
- Mills may opt for higher capacity utilisation
Morning Brief: The much-expected steel Safeguard Duty was recently announced by the Directorate General of Trade Remedies (DGTR). A 12% provisional duty has been imposed on 90% of imported steels, covering flats and includes hot rolled and cold rolled coils, coated coils and sheets amongst others. But what will be the final impact on the landed import price? BigMint investigates:
The threshold import price of hot rolled coiled sheets and plates, on CIF (cost, insurance and freight) basis has been pegged at $675/t. For hot rolled plates, the value is $695/t, for cold rolled, $824/t and for metallic, coated and others, at $861/t. The threshold import price for colour-coated coils and sheets, whether or not profiled, is at $964/t.
Estimated increase in landed price post-safeguard imposition
BigMint has calculated the impact of the 12% safeguard duty on hot rolled coils, which is the largest category that gets imported into India, from both FTA and non-FTA countries. The CFR price of HRC is taken at $498/t with 7.25% basic customs duty plus 0.75% of cess at 10% of the BCD which takes up the price to $539/t. With the Indian rupee (INR) conversion rate taken at 87 to the dollar, it works out to INR 46,879/t.
The 12% safeguard duty along with a cess of 1.2% (10% of the safeguard duty) works out to $71/t. Therefore, post-safeguard duty, the cost is estimated at $610/t ($539/t + $71/t) or INR 53,067/t. With the addition of INR 2,000/t as port handling charges, the total landed cost of HRC imports is calculated at INR 55,067/t.
On the other hand, currently, domestic benchmarked, trade-level HRC prices (IS2062, Gr-E250 Br., 2.5-8mm/CTL), ex-Mumbai and minus 18% GST, are hovering at INR 51,500/t, making these cheaper by well over INR 3,500/t.
The final landed price of HRC imports from FTA countries works out to INR 54,173/t, a tad lower from the non-FTA price.
FY’25 domestic prices remain competitive
BigMint data also reveals that in FY’25, domestic trade-level prices, ex-Mumbai and minus GST, averaged INR 52,967/t ($609/t with the INR pegged at 87), while the landed cost of imports from FTA countries were at INR 52,429/t ($603/t). The landed cost from China averaged INR 53,258/t ($612/t).
The Indian prices were almost neck-and-neck with that of imports because of the quick and sharp price increases that happened especially from end-February onwards, buoyed by expectations of the safeguard duty.
Price hike expectations
The safeguard duty is expected to bring a notable shift in pricing trends. Domestic steel prices already climbed up to INR 51,500/t ($599/t at current exchange rate of 86) on Friday, 21 March, an increase of INR 1,700/t against the previous assessment. This vindicates the stand many had taken that, in the short term, prices are likely to rise by INR 500-1,000/t ($6-12/t) as producers adjust to the revised landed cost of imports. This adjustment is expected to bolster the market position of Indian steelmakers while offering opportunities for margin expansion.
Way forward
While the safeguard duty offers temporary relief to the domestic steel industry, future reviews may be necessary to ensure sustained protection. High-quality/value-added steel imports are expected to rise based on demand, while imports of normal-grade finished flats will likely decline. With reduced import volumes due to the safeguard duty, domestic producers have a chance to claim a larger share of the market.
The shift in market dynamics will allow for higher capacity utilisation by domestic mills. Leveraging this pricing cushion, steelmakers can strengthen their bottom line, positioning Q1 FY’26 as a period of notable profitability improvement.
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