Steel companies to benefit if China imposes tariff on exports; here’s how

Steel stocks are in focus after Bloomberg report suggested that China is considering imposing a tariff on steel exports in the range of 10-25 percent. If that happens, it will be very positive news.

Prices will move up and supplies will get restricted in the global markets. China had already cancelled the export rebate of around 13 percent a few months ago and now they are talking about export tax. So, putting both factors together, the supply coming out of China is likely to get hit substantially in the coming months itself.

It will be an advantage for Indian steel companies because Chinese production will dip and there will be lower exports coming out of China.

According to estimates, exports coming out of China could get hit by around 20-30 million tonnes.

Also, there could be a tailwind coming here for steel companies in India because most analysts are factoring in that in the second half of this year, steel prices will soften.

If these taxes come about, global steel prices will remain elevated so prices will not correct. Indian steel companies will have more avenues to go ahead and export.