Indian Steel Shares Rally on Speculation Curbs to Stem Imports

  • Tata Steel says unfairly priced imports distorting markets
  • Global supply glut spurred by economic slowdown in China

Jindal Steel & Power Ltd. led gains in shares of Indian steel makers on speculation the government will impose a minimum import price to help stem a surge in cheaper shipments coming from overseas.

Jindal Steel jumped 11 percent to 63.5 rupees in Mumbai, the most since Oct. 5, while Steel Authority of India Ltd. climbed 5.8 percent to 40.85 rupees and JSW Steel Ltd. advanced 2.6 percent to 1,037.05 rupees. Tata Steel Ltd., which reported a quarterly loss on Thursday, reversed early declines to end 3.5 percent higher at 233.85 rupees.

“The rally in prices is more to do with the expectation of a minimum import price by the government,” said Pritesh Jani, an analyst at Religare Capital Markets Ltd. “Indian companies will benefit but much will depend on how the MIP is enforced and the products which will be under the coverage list.”

An economic slowdown in China, the biggest producer and consumer of metals, is pummeling the global steel industry as it exports its surplus in the face of faltering domestic demand. Last week, India’s No. 3 mill JSW Steel swung to a record quarterly loss, while Japan’s three biggest producers have all cut full-year profit forecasts due to deteriorating markets.

Lack Luster

Steel exports from countries such as China, Russia, South Korea and Japan have surged to all-time highs on the back of lack-luster domestic demand, excess capacity and competitive currencies, Tata Steel said on Thursday.

Steel Secretary Aruna Sundararajan had said in December that India plans to step up measures to protect its debt-laden domestic steelmakers by imposing a minimum price on steel imports and studying loan restructuring.

Tata Steel, the nation’s biggest producer of the alloy, reported a reported a third quarter loss of 21.3 billion rupees, versus a profit of 1.57 billion rupees a year earlier. The loss included an exceptional item of 7.12 billion rupees on account of non-cash writedown of fixed assets and restructuring linked to its European operations, and an employee separation plan in India. Its shares tumbled as much as 4.9 percent earlier in the day.

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