Tata Steel shares rose 1 percent to reach a more than three-month high of Rs 111.60 on BSE in a weak market Friday. The stock was trading at its highest level since Aug. 19, 2022. By comparison, the S&P BSE Sensex fell 0.82 percent to 62,764 as of 11:48 am.

Shares of iron & steel firm Tata Group traded higher for a fourth straight day, up 6 percent over the period. In the past month, it has rallied 10 percent against a 3 percent rise in the benchmark index.

However, in the past six months, Tata Steel has underperformed the market as well as peers with a 3 percent gain on weak earnings compared to the Sensex’s 12 percent rally. Meanwhile, JSW Steel (up 29 percent) and Jindal Steel & Power (49 percent) have seen their market prices jump more than 25 percent during this period.

Last month, in an effort to give the domestic steel industry a boost and increase exports, the government lifted the 15 percent export duty on steel products (which was previously imposed during May 2022).

Steel products now attract zero export duties compared to the previous 15 percent. The abolition of export duties is a significant relief and a long-term positive for the domestic steel sector, according to analysts at ICICI Securities.

The government also revoked the export duty for iron ore lumps and fines below 58 percent Fe content and iron ore pellets. Exports of iron ore lumps and fines above 58 percent Fe content will now be subject to a lower duty of 30 percent (reduced from the previous 50 percent). The import duty concessions for anthracite coal/PCI, coking coal, coking & semi-coking and ferronickel have also been revoked. All of these assignment changes take effect November 19, 2022.

“The elimination of export duties bodes well for domestic steel players even in the long term. Global steel demand has weakened since May 2022, which has put downward pressure on steel prices. Because the price of steel in the global market is currently decreasing, therefore, export volume tends to increase, especially when global prices recover. However, the recent move to abolish export duties on steel products did provide an opportunity for domestic players to increase their export volumes especially when global steel prices strengthen”, the broker said in a sector update. This increased Tata Steel from HOLD to BUY.

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