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Shares of major domestic steel producers, including Tata Steel, SAIL, and JSW Steel, rose by up to 5% on Wednesday, in an otherwise muted broader market. The rally in steel stocks was driven by optimism over China’s plan to reduce steel production between 2025 and 2026.
According to market analysts, China’s production cut is aimed at tackling global overcapacity, which has kept steel prices under pressure for months. This move is expected to curb the inflow of low-cost steel into India, providing a boost to domestic metal producers.
Cheering the news, shares of Tata Steel, the country’s largest steel manufacturer, rose by as much as 3.7% in the first two hours of trade so far. SAIL , JSW steel , Jindal Steel & Power , NMDC Steel, Tata Metalik , Kalyani Steels , Jindal Stainless , Hindustan Copper shares also rose in the range of 2-5%.
According to a recent report by Emkay Global, while India and China’s policies are addressing supply-side constraints, domestic steel demand continues to be muted. Market participants are hoping for a post-monsoon revival starting September, driven by a pick-up in government capex and GST recalibration.
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“Interestingly, we are of the firm view that price volatility could reduce with the safeguard duty’s extension for three years, with the price floor being taken care of by policy clarity, and any meaningful upside would be capped by import price parity,” Emkay said in a report dated August 27, 2025.
Last month, the Directorate General of Trade Remedies (DGTR) issued its final recommendation to impose a safeguard duty on imports of certain flat steel products for three years, aimed at protecting domestic manufacturers. The proposed duty is 12% in the first year, 11.5% in the second, and 11% in the third. This move is expected to partially decouple domestic steel prices from import parity, which is usually linked to China’s steel prices.
Currently, domestic steel trades at a 9% discount to import prices, allowing the duty to curb imports rather than artificially raise domestic prices. This decoupling gives Indian producers more flexibility to set prices based on local supply-demand conditions, reducing reliance on China’s volatile macro trends, according to the Emkay report.
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