Metal stocks surge: Jindal Steel, SAIL, JSW Steel, Nalco rally up to 4%

Shares of metal companies were in high demand on Monday, rising up to 4 per cent on the NSE after the Directorate General of Trade Remedies (DGTR) took note of the steel industry’s request for a 25 per cent safeguard duty on imports and launched an investigation. 

 

The Nifty Metal index was among the top gainers among sectors, rising up to 1.65 per cent in intraday deals. Individually, Jindal Steel and Power gained 4.3 per cent at Rs 947.50, Steel Authority of India rising 3.4 per cent at Rs 120.08, JSW Steel surging 3.3 per cent at Rs 947.95, and National Aluminium advancing 2.2 per cent at Rs 220.30 per share in intraday trade. 

 

 

Others such as Tata Steel, Hindalco, Vedanta and Adani Enterprises among others also rose up to 1 per cent each in intraday deals of Monday.

 

The metal stocks picked up pace after the DGTR, under the Ministry of Commerce initiated an investigation into imports of 'Non-Alloy and Alloy Steel Flat Products,' which are used across various industries such as fabrication, pipe making, construction, capital goods, automobiles, tractors, bicycles, and electrical panels. 

 

The investigation follows a complaint filed by the Indian Steel Association, representing its members—ArcelorMittal Nippon Steel India, AMNS Khopoli, JSW Steel, JSW Steel Coated Products, Bhushan Power & Steel, Jindal Steel and Power, and the Steel Authority of India—under the Customs Tariff Act of 1975. 

 

DGTR said that the applicants have raised concerns about a "recent, sudden, sharp, and significant" surge in the volume of imports, which they claim has caused "significant" harm to the domestic industry.

 

They are seeking the imposition of safeguard duties to shield the domestic producers of similar or directly competitive products from further injury. 

 

The DGTR's probe will review import data from October 2023 to September 2024 and will also examine relevant data from 2021 to 2024. 

Analysts believe that the government’s decision to initiate a duty investigation is a prudent step, considering the finished steel imports have surged to 8 years high of 6.5 million tons (MT), up by per cent 27 per cent Y-o-Y in the period between April’ to November .

  "Particularly, the imports from China have reached all time high to 1.96 MT during this period. This has led to domestic steel prices declining to 4 years low to Rs 500/ton, significantly affecting the revenue and profitability of domestic steel companies. Thus, the duty investigation is expected to help curb the decline in steel prices. Furthermore, the potential imposition of

safeguard duties could provide a relief to domestic steel players, particularly the top 4: JSW Steel, Tata Steel, SAIL and Jindal Steel and Power, which are aiming to double their capacity by end of the decade amid healthy demand prospects in the country," said analysts at ICICI Securirties.   Within the metal space, ICICI Securirties picked JSW Steel as its top preference as it expects the company to achieve record

profitability given its ambitious expansion plans with the emphasis on value added products and focuses on securing critical raw material. 

 

While a final decision is pending after the DGTR’s investigation, media reports suggested that the imposition of a safeguard duty on steel imports could be considered based on preliminary findings, even before the completion of the final report. The probe will evaluate whether to impose a temporary safeguard duty of up to 25 per cent to curb excessive steel imports.