Indian steel equities are poised to extend recent gains as domestic prices strengthen, Morgan Stanley said on Friday, citing a 27% rebound in hot-rolled coil (HRC) prices since mid-December and a 6% rise in rebar.
Hot-rolled coil prices climbed about 1% week-over-week to Rs 58,500 per tonne, while rebar prices increased roughly 2% to Rs 45,400 per tonne. Both benchmarks remain below import parity levels, which Morgan Stanley noted should limit further import inflows and support domestic pricing.
Iron ore prices held steady at around $96 per tonne for 61% Fe content, while Australian hard coking coal surged 10% week-over-week to $250 per tonne, driven by supply disruptions in China’s Shanxi province. Domestic steel spreads narrowed by 2% during the week but remain 30% above mid-December lows.
Year-to-date, Indian steel stocks have gained 8%, outpacing the broader Sensex’s 9% decline. Morgan Stanley attributed the rally to inventory destocking over recent months, supported by strong demand and seasonal production slowdowns.
Looking ahead, the bank expects restocking in the coming months as capacity additions boost output. However, it warned that steel prices may face pressure during the monsoon season, which could temper near-term stock performance. Morgan Stanley maintained a positive medium-term view, citing government support, a balanced supply-demand outlook, and China’s structural measures to curb oversupply.
