Shares of NMDC Steel soared on Wednesday, outshining its industry rivals after the Directorate General of Trade Remedies (DGTR) recommended a provisional 12% safeguard duty on flat steel products. The move breathed new life into the stock, which had been grappling with recent losses.
NMDC Steel Leads the Charge
NMDC Steel Ltd. surged as much as 7.5%, leaving behind heavyweights like JSW Steel, Tata Steel, and SAIL, which saw gains between 2% and 4%. It’s the second consecutive day of gains for NMDC Steel, a welcome shift after a rough five-day losing streak.
The company’s rebound stands out, especially considering it operates as a demerged entity of NMDC Ltd., running a 3 million tonne per annum (MTPA) steel plant in Nagarnar, Chhattisgarh. Its production lineup includes hot rolled steel, low carbon steel, HSLA & Dual Phase Steel, and API quality steel — all products that could benefit from the proposed duty.
The safeguard duty aims to shield domestic producers from a surge in cheap imports. While the final decision rests with the Finance Ministry, the market clearly likes what it sees so far.
Why the Safeguard Duty Matters
The DGTR’s recommendation to impose a 12% duty on flat steel products for 200 days is no small move. It’s designed to help domestic steelmakers regain pricing power and protect margins — something that’s been under pressure due to cheaper imports.
But what does this mean for investors? Let’s break it down:
- Short-term boost: Stocks like NMDC Steel are rallying on optimism that the duty could curb imports, giving local producers breathing room to raise prices.
- Long-term outlook: If the duty becomes permanent, it could reshape market dynamics, benefiting companies with a strong domestic footprint.
- Volatility ahead: The safeguard duty still requires approval. Any delay or rejection could trigger a sell-off.
For NMDC Steel, which lacks analyst coverage and trades near its 52-week low, the news is a rare catalyst.
A Stock Trying to Find Its Footing
Since its market debut in February 2023 at ₹37.75 per share, NMDC Steel hasn’t had the smoothest ride. The stock has tumbled from a 52-week high of ₹68.95 to hover near its 52-week low. Even with today’s rally, shares are still down nearly 50% from their peak, currently trading around ₹35.9.
Investors seem cautiously optimistic. The safeguard duty could turn the tide, but the stock’s path forward hinges on more than just trade policies. Operational performance, market demand, and global steel prices will all play a role.
Steel Sector Shakes Off the Rust
The broader steel sector showed signs of life, with companies like JSW Steel, Tata Steel, and SAIL also posting gains. However, NMDC Steel’s rally stole the spotlight — a sign that smaller, under-the-radar players might have more room to run if protectionist measures gain traction.
Market watchers are now eyeing the Finance Ministry’s next move. Will they greenlight the safeguard duty? If they do, NMDC Steel might just find itself back in the game.
