Why Steel Stocks Are Rising
rapid expansion of its infrastructure. This sector has played a pivotal role in bolstering the nation's economic landscape, making substantial contributions to its GDP, and offering gainful employment opportunities to millions of individuals. Out of the blue on Monday this week, shares of Vallabh Steels, Prakash Industries, Jindal Stainless, Steel Authority of India, and Steel Exchange of India surged by an impressive 11%.
Here's what propelled these steel stocks to remarkable gains. Indian steel stocks gained traction and rallied on 11 September 2023 due to the imposition of a five-year anti-dumping duty on certain Chinese steel products. This move was prompted by a substantial 62% surge in steel imports from China to India between April and July, compared to the corresponding period in the previous year.
China's steel exports to India reached 0.6 million metric tons, securing its position as the leading steel exporter to India, surpassing South Korea. During this timeframe, India imported a significant 2 million metric tons of finished steel, marking the highest level since 2020 and reflecting a 23% increase from the previous year. The decision to impose anti-dumping duties is in direct response to concerns raised by the domestic steel industry regarding potential unfair trade practices by Chinese sellers.
Notably, China primarily exports cold-rolled coils or sheets to the Indian market. Furthermore, on the global stage, India's actions are part of a broader trend. The United States and the European Union have been engaged in discussions and negotiations to formulate new trade tariffs aimed at addressing excess steel exports.
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