Bank of America Merrill Lynch says import restrictions helped steelmakers turn a profit

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MUMBAI: Bank of America Merrill Lynch said India’s steel sector has reversed the trend of negative revenue growth after 7 quarters, helped by the government’s restrictions on imports.

The brokerage said the steel sector should continue to benefit from import restrictions in the near term. Imposition of the Minimum Import Price (MIP) has helped Indian companies restore margins, it added.

“Government measures to support the steel sector have resulted in a meaningful improvement in sector profitability, with only Steel Authority of India Ltd (SAIL) reporting negative earnings before interest and tax in the third quarter,” it said in a report titled “Indian Corporate Ledger.”

Tata SteelBSE 0.80 % and JSW SteelBSE -0.53 % are India’s largest steel makers apart of government-owned SAIL. These companies took a hit on profitability as China began dumping cheap steel into India and around the world.

Indian government imposed a MIP on steel imports in February last year to give some breathing space to Indian steel makers.

Tata Steel reported a consolidated net profit of Rs 231.90 crore in the quarter ended December versus net loss of Rs 2,747.72 crore a year ago, while JSW Steel posted a consolidated net profit of Rs 730 crore in the same quarter against net loss of Rs 709 crore last year.