On March 19, 2025, steel stocks like Tata Steel, JSW Steel, and SAIL experienced a notable surge after the Directorate General of Trade Remedies (DGTR) recommended a 12% safeguard duty on select steel products. 

The safeguard duty is proposed to be effective for 200 days and aims to protect the domestic steel industry from a rise in imports, particularly from countries like China, South Korea, and Japan.

The sudden surge in imports has been a growing concern for the Indian steel sector. Domestic steelmakers have been facing stiff competition from foreign producers who offer cheaper products. 

This influx has not only pressured margins but also jeopardized the stability of India’s steel industry. In response, the DGTR has stepped in with a safeguard measure that would add a 12% duty on select alloy and non-alloy steel flat products.

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Tata steel, JSW steel, and SAIL shares rally

After the DGTR’s recommendation, the shares of top steelmakers such as Tata Steel, JSW Steel, and SAIL surged, with some gaining up to 5%. Let’s break down the stock movements:

• SAIL shares: Saw the highest gains, rising by 5% to ₹ 114.40 from ₹ 108.90. This pushed its market cap to ₹ 46,731 crore.
• Tata Steel shares: Increased by 3% to ₹ 159.25 from ₹ 154.65, lifting its market cap to ₹ 1.97 lakh crore.
• JSW Steel shares: Rose nearly 3% to ₹ 1047.75, pushing its market cap to ₹ 2.51 lakh crore.
• NMDC Steel shares: The stock surged by 8.3%, reaching ₹ 36.40 from ₹ 33.65.

These gains were seen across the board, reflecting investor optimism around the safeguard duty. The rally was not just limited to individual stocks but extended to the entire metal sector, with indices like the Nifty Metal and BSE Metal Index rising 1.5% and 1.4%, respectively.

The rationale behind the safeguard duty

The imposition of the 12% safeguard duty comes after a comprehensive investigation into the impact of rising imports on India’s steel industry. The DGTR had launched an inquiry in December 2024 to assess whether the surge in imports warranted such a measure. The investigation revealed that the domestic steel industry was facing severe competition from cheaper imports, especially from countries with lower production costs.

By imposing the safeguard duty, the government aims to curb this surge and level the playing field for domestic manufacturers. This will protect the interests of Indian steelmakers, enabling them to maintain their profitability and market position. The 12% duty would increase the landed cost of imported steel, making domestically produced steel more competitive.

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The impact on the steel industry and investors

The safeguard duty has sparked a wave of optimism among investors. Not only does it promise relief to domestic steelmakers, but it also opens the door for higher prices for domestic products. According to analysts, the imposition of the safeguard duty could lead to an increase in domestic steel prices, which may help steelmakers like Tata Steel, JSW Steel, and SAIL improve their margins.

Tata steel and JSW steel: analyst perspectives

• JPMorgan: The international investment bank views the 12% safeguard duty as a positive development for Indian steelmakers. They estimate that the duty would increase the landed cost of imports by approximately ₹ 5,500 per tonne. While domestic prices might rise by ₹ 2,000 per tonne, the overall effect on earnings could be significant, especially for Tata Steel and JSW Steel.
• Nomura: The Japanese brokerage firm has pointed out that while the price hike window for domestic steelmakers may be limited, the safeguard duty could offer them some relief, especially when the price of iron ore increases due to global supply chain constraints.

Broader implications for the steel market

This safeguard duty aligns with the global trend of countries imposing trade barriers to protect their domestic industries. Countries like Vietnam, South Korea, the US, and Europe have also raised tariffs on steel imports in response to similar concerns. The move is part of a broader effort to counterbalance the influence of China, the world’s largest steel producer, which has been flooding the global market with cheaper steel.

For India, the safeguard duty is a temporary measure designed to stabilise the market and allow domestic producers to recover from the onslaught of cheap imports. However, the Indian steel industry will continue to face challenges, including fluctuations in global iron ore prices and the uncertainty of future trade measures.

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Conclusion

While the steel sector’s recent surge in stock prices is a sign of optimism, investors need to remember that the safeguard duty is not a permanent solution. It’s a temporary measure designed to protect domestic steelmakers, and the true impact will unfold over the coming months. 

For now, it’s clear that the safeguard duty has sparked a rally, and investors will need to stay informed about the evolving market conditions.