India’s safeguard duty on steel has proved insufficient to stem the slide in domestic prices this year, with weakness in the Chinese market continuing to weigh heavily on sentiment. The measure has, however, moderated the pace of decline, bolstering expectations that the sector could find firmer footing in the second half of 2025.
Starting from January, every month reported lower prices compared with the same month of 2024, data accessed from BigMint showed (see chart), despite the temporary bump up in April triggered by the announcement of the provisional (200-day) safeguard duty of 12 per cent.
Since then, the Directorate-General of Trade Remedies under the ministry of commerce has, on August 16, advocated a 3-year duty protection to the domestic steel industry, starting with 12 per cent in year one and ending with 11 per cent in year three.
While the landed cost of steel from China and Japan is still holding below the domestic prices, giving cushion to the domestic mills, the narrow gap with the import may come as a stumbling block for Indian steelmakers to seek higher prices going forward.
According to Hemant Dewangan, AGM (steel), hot-rolled coil (HRC) prices have remained lower on a year-on-year basis, largely influenced by global trends, particularly from China, despite the support from safeguard duties.
“From February to July 2025, Indian HRC prices were 4–13 per cent below last year’s levels, while Chinese HRC prices experienced even steeper year-on-year declines of up to 18 per cent. This indicates that Indian prices have aligned with the softer global benchmark set by the Chinese market,” Dewangan said.
Even as China is trying to address domestic overcapacity by shutting down mills, it is still projected to export 110 million tonnes of steel, more than half of India’s installed capacity. Consequently, it is putting significant pressure on global steel prices and on Indian domestic prices.
Indian steel makers are pinning hope that in the October-March period, when consumption is led by post-monsoon construction activity pick-up and demand from cars and consumer durables during festivals and weddings, domestic prices will get support.
“We are looking at better demand conditions due to government spending, better monsoon and festive pick-up,” said Koushik Chatterjee, ED & CFO, Tata Steel. He, however, pointed out that prices are more stable now, aided by the safeguard duty, even though the rate should have been 25 per cent.
Raw materials cool off
One of the key drivers for softer steel prices globally is also weaker raw material prices, which allows steelmakers to offer products at a competitive rate. Both coking coal (used by blast furnace-led steel mills) and ferrous scrap (bought by smaller electric furnace operators) prices have been subdued. Coking coal saw a year-on-year decline of around 17 per cent, and ferrous scrap prices hit a four-year low with a year-on-year change of approximately 11 per cent.
A weaker raw material price may support the margins of the steelmakers who had warned that capex planned by them through the decade may not see the light of day if cheap imports constrain their ability to fund new projects.
DGTR, in its final report, said the industry needs appropriate policy support so that India can achieve 300 mt capacity by 2030. However, safeguard duties may have helped curb imports and provide some price support, but they have not been sufficient to counteract international price pressures and the global supply-demand imbalance. Whether steelmakers will be aggressive in adding capacity going forward will remain an open question.
