Brokerage firm Nomura has maintained a positive stance on major Indian steel producers, citing strong domestic demand and rising rebar prices. With consumption growing at 3.9% year-on-year in August, analysts anticipate margin stability for the sector. However, rising imports remain a critical factor for investors to track in the coming quarters.
Nomura has retained its bullish outlook on major Indian steel players, including Tata Steel, JSW Steel, and Jindal Steel, citing a mix of steady domestic demand and recovering prices. The brokerage believes these companies are well-positioned for the first half of the 2027 fiscal year, benefiting from a supportive local market environment.
The primary driver for this sentiment is the strength in long steel products, specifically rebar. While Hot Rolled Coil (HRC) prices have stayed firm around ₹63,800 per tonne, rebar prices have seen a notable increase, rising by ₹1,650 per tonne in the week ending September 25 to reach ₹62,100 per tonne. This trend is helping narrow the price gap between flat and long steel products, which is a positive signal for demand recovery after previous periods of market slowdown.
Despite global market volatility, Indian steelmakers are currently managing to keep their profit margins stable. Current spot margins for HRC are estimated at roughly ₹37,540 per tonne. This stability is largely helped by manageable raw material costs. Iron ore prices have remained predictable at $91 per tonne, and imported coking coal prices recently dipped to $276 per tonne. This cost control helps protect profitability even as input costs remain elevated compared to historical averages.
While the demand outlook is positive, investors must also monitor the trade landscape. India continues to act as a net importer of steel. In August, steel import volumes rose 8% to hit 0.72 million tonnes. If domestic producers increase prices too aggressively, it often creates a window for cheaper imported steel to enter the market, which can eventually create pressure on domestic prices and margins.
The future performance of these steel companies will likely depend on whether they can sustain these price hikes against the backdrop of rising imports. Investors should keep a close watch on monthly consumption data, import volumes, and any significant shifts in global coking coal prices. These factors will be the primary indicators of whether the current margin stability can hold in the coming quarters.