Steel stocks yet again prove their mettle post anti-dumping duty

Recently the Indian government has imposed an anti-dumping duty on some cold rolled flat alloy and non-alloy steel products from China, Japan, Korea, Russia, Brazil and Indonesia. The anti-dumping duty will be levied to safeguard the domestic industry against cheaper prices in the exporting countries.

Metal sector stocks, majorly Bhushan Steel, Jindal Steel and Power, Steel Authority of India and JSW Steel will benefit from the news. Bhushan Steel and Jindal Steel have risen more than 4 per cent to Rs 42.10 and 85.45 respectively. Metal sector has surged the most amongst all other sectors with nearly 4 per cent gains. Steel stocks have risen despite of weaker Q1 numbers amid better outlook for the next quarter.

The anti-dumping duty is valid for six months. The amount remains as the difference between landed value and the respective prescribed value, which is USD 474 per tonne and USD 557 per tonne levied on imports of the subjected goods, originating or exported from the above countries.

A contrarian China that dominates the world in steel production is cutting down on production amid over capacity to revitalise the steel sector; and by implying higher monetary concentration on quality over the quantity produced is working towards the same goal.

Earlier to protect the interests of domestic producers, Minimum Import Price (MIP) was imposed on 66 steel products for two months. There is already weak demand prevailing in the markets and hence the debt defaulters have started dropping their steel prices to gain market share. Banks also have extended loans to big players like Bhushan Steel and Essar Steel and are finding suitors for them in return of 10-15 per cent of turnover instead of interest.