Nomura expects improved earnings for Tata Steel, JSW Steel, Jindal Steel, and Lloyds Metals despite a recent slump in rebar prices. The brokerage cites resilient hot-rolled coil prices and stable raw material costs as key factors for profit margins in the first quarter of FY27.
Brokerage firm Nomura has maintained a positive outlook on major Indian steel producers, including Tata Steel, JSW Steel, Jindal Steel and Power, and Lloyds Metals & Energy. Despite a challenging price environment for certain steel products, analysts believe these companies are prepared to show stronger earnings performance for the first quarter of the 2027 financial year.
Steel Market Price Divergence
The domestic steel market is currently experiencing a split in price trends. While hot-rolled coil (HRC) prices have shown stability, holding at Rs 58,200 per tonne for the week ending July 3, 2026, rebar prices have faced downward pressure. Rebar prices fell by Rs 1,250 over the week to reach Rs 49,900 per tonne. This drop is notable as it represents a six-month low and the first time this year that rebar prices have fallen below the Rs 50,000 threshold. This difference highlights that producers with a stronger focus on flat steel products like HRC are currently seeing more stable demand compared to those heavily reliant on the construction-linked rebar market.
Margin Stability and Raw Material Costs
Profitability for steel manufacturers remains a critical focus for investors. Data indicates that HRC spot margins were steady at roughly Rs 34,285 per tonne in June 2026. This level remains higher than the median margin seen over the previous two years, suggesting that these companies have maintained better profitability than their recent historical average despite the rebar price slump. A key supporting factor for these margins has been the stabilization of raw material prices. Imported coking coal has remained steady at $244 per tonne, and global iron ore prices are near their year-to-date lows of $92 per tonne. Lower input costs, combined with the delayed effect of earlier product price increases, are expected to support sequential improvements in EBITDA per tonne—a standard measure of operational profit—for these steel majors.
Global and Domestic Context
While the domestic outlook remains stable, the global steel environment continues to face pressure from China. The property sector in China, a major driver of global steel demand, continues to show weakness with declining investment and home sales. Although there is some activity in select large cities, the overall recovery remains uneven. Investors should monitor how these domestic steel producers manage this global demand pressure alongside domestic price fluctuations. The next major monitorable will be the actual earnings reports for the quarter, where management commentary on demand trends and raw material cost projections will provide further clarity on the sustainability of these margins.