Speaking to ET Now, Welekar said the safeguard duty is positive for the sector as a whole, with large steelmakers having significant exposure to flat steel products likely to benefit the most. The duty effectively widens the pricing gap between Indian steel and landed Chinese hot-rolled coil (HRC) imports, giving domestic mills greater room to defend prices.
“Post the expiry of the provisional safeguard duty, Indian steel was trading at around a 5% discount to landed Chinese HRC prices. With the imposition of nearly a 12% safeguard duty, that discount widens to about 14%, which provides meaningful protection to Indian steelmakers,” he said.
Demand remains India’s key strength
While steel prices have remained largely muted in the current calendar year, Welekar highlighted that India continues to be a global bright spot for steel consumption. Domestic steel demand has been growing in the lower double digits, with consumption up around 8% in the first eight months of the current fiscal—far stronger than global peers.
However, the sector has faced pressure from the supply side. From the second quarter of FY26 onwards, several new steel capacities came on stream, pushing domestic production growth to around 11%. At the same time, export prospects have weakened due to the introduction of the Carbon Border Adjustment Mechanism (CBAM) in Europe, a key export destination for Indian steel.
“In this backdrop of strong demand but abundant supply and weak export outlook, the safeguard duty becomes an important support for the sector,” Welekar said.
Volumes, not prices, to drive earnings
Despite the safeguard duty, Axis Securities does not expect a sharp rise in steel prices. According to Welekar, the long-term thesis remains unchanged: earnings growth for steel companies will primarily be driven by volume expansion rather than price hikes.“With continuous capacity additions by steel producers, supply remains ample. Even after the safeguard duty, steel prices are unlikely to return to the highs seen in previous years,” he noted. “As a result, incremental volumes from new capacities will be the key driver of earnings growth for players like Tata Steel and JSW Steel.”
Most major steelmakers are expanding their domestic footprint, and as these capacities ramp up over the coming years, volume-led growth is expected to support revenues and profitability even if prices remain flat or rise only marginally.
Trade diversion risks manageable
Addressing concerns around global trade diversion—especially as countries such as the US, South Korea and Vietnam tighten trade defences against Chinese steel—Welekar said the current 12% safeguard duty appears adequate for now.
“At present, Indian steel prices trade at a meaningful discount to landed import prices, which should deter excessive imports. If domestic mills aggressively hike prices, that gap could narrow, but for now the situation looks manageable,” he said.
Overall, the safeguard duty is seen as a timely and supportive measure that stabilises the sector’s outlook, even as steel companies continue to rely on domestic volume growth to navigate a challenging global environment.