Expectations of safeguard duty drive up steel prices

DGTR last week suggested a 15% duty on the alloy to protect India from cheap imports

- Dhirendra Kumar & Nehal Chaliawala

Prices of steel in the domestic market have climbed 3-4% in recent weeks on expectations of imposition of a 15% safeguard duty on the import of the crucial alloy, sparking concerns of cost inflation for user industries such as consumer durables, automakers, as well as infrastructure and real estate firms.

Mint reported last week that the Directorate General of Trade Remedies (DGTR) has recommended 15% safeguard duty on import of steel to protect domestic industry from cheap imports.

While an official announcement to the effect is yet to be made, Darpan Jain, the director general of trade remedies, told Mint on Monday that it is under consideration.

Analysts expect that a 15% safeguard duty could translate to a similar hike in domestic steel prices. This is because prices of local steel are closely linked to the global prices of the alloy.

Industries that use steel as an input have opposed such a duty, arguing that raw material bills will become steeper.

"The duty must be there to protect the Indian industry and Indian manufacturers to make them globally competitive, but this duty should be there on finished products, not on raw materials," said Ravi Saxena, CEO and founder of Wonderchef, a manufacturer of stainless-steel kitchen utensils.