Five steel stocks rose 3.04% to 7.12% at 15:21 IST on BSE on reports that the government has extended safeguard import taxes on some steel products until March 2018 to curb imports of cheap Chinese steel and shield domestic mills.
Tata Steel (up 7.12%), Steel Authority of India (up 4.18%), JSW Steel (up 3.09%), Bhushan Steel (up 4.15%) and Jindal Steel & Power (up 3.04%) edged higher.
Meanwhile, the S&P BSE Sensex was up 432.33 points or 1.74% at 25,332.79
The extended import duty will apply to hot-rolled flat products of non-alloy and other alloy steel in coils of 600 mm width. It would start at 20%, minus any existing anti-dumping duty, and be lowered to 10% by March 2018 depending on the value of the goods, reports indicated. The safeguard tax will not be imposed on steel products imported at or above the floor price, reports added.
Tata Steel jumped after the company announced that it has decided to explore all options for portfolio restructuring including the potential divestment of its UK subsidiary Tata Steel UK, in whole or in parts. Tata Steel said that its board of directors after reviewing the recent performance of the European business of the company noted with deep concern the deteriorating financial performance of the UK subsidiary in the last twelve months. The management has advised the board of its European holding company Tata Steel Europe to explore all options for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in parts. Given the severity of the funding requirement in the foreseeable future, the Tata Steel Europe board will be advised to evaluate and implement the most feasible option in a time bound manner, Tata Steel said in a statement.
While global steel demand, especially in developed markets like Europe has remained muted following the financial crisis of 2008, trading conditions in the UK and Europe have rapidly deteriorated more recently, due to structural factors including global oversupply of steel, significant increase in third country exports into Europe, high manufacturing costs, continued weakness in domestic market demand in steel and a volatile currency. These factors are likely to continue into the future and have significantly impacted the long-term competitive position of the UK operations in spite of several initiatives undertaken by the management and the workers of the business in recent years.
Further, the Tata Steel board also reviewed the proposed restructuring and transformation plan for Strip Products UK, prepared by the European subsidiary in consultation with an independent and internationally reputed consultancy firm. Based on the review conducted, the Tata Steel board came to a unanimous conclusion that the plan is unaffordable, requires material funding support in the next two years in addition to significant capital commitments over the long term, the assumptions behind it are inherently very risky, and its likelihood of delivery is highly uncertain. Therefore, the board concluded that it would not be able to support the investment necessary to proceed with the proposed transformation plan for strip products UK.
Tata Steel further said that the company's discussions with Greybull in relation to a sale of the UK Long Products business would continue.
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Meanwhile, copper edged lower in the global commodities market. High Grade Copper for May 2016 delivery was currently off 0.63% at $2.2 per pound on the COMEX.
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