Steel stocks are witnessing a strong rally in intra-day trade on Tuesday, with shares of major players such as Jindal Steel, Tata Steel, and Steel Authority of India (SAIL) climbing up to 5%. The bullish movement comes after a significant drop in steel imports for November, which fell by 28% month-on-month (MoM) and 32% year-on-year (YoY), totalling 0.75 million tonnes (MT). Despite a modest 11% decline in MoM exports, Indian steel exports surged by 71% YoY, reaching 0.40 MT. These factors have ignited optimism among investors, providing much-needed relief to domestic steel producers.
The reduction in imports is primarily attributed to the government’s strict quality checks on steel in November, a measure that has benefited local manufacturers. This policy has effectively curbed the entry of low-quality imported steel, giving a competitive edge to Indian steelmakers. In parallel, Chinese fiscal and monetary policies are expected to boost domestic consumption in China in 2025. This is expected to reduce China’s steel exports, offering further respite to Indian producers grappling with falling steel prices at home. Steel prices in India have been under pressure, with domestic prices falling to a three-year low of approximately Rs. 48,000 per tonne, partly due to rising imports from China. However, the expected slowdown in Chinese exports and domestic demand expansion in India could stabilize prices in the coming months, boosting local steelmakers’ profitability.
ICICI Securities remains optimistic on the sector, with JSW Steel emerging as the brokerage’s top pick. Analysts cite the company’s strategic capacity expansions, robust domestic demand, and anticipated improvements in profitability as key drivers of future growth. As of Tuesday’s trading, JSW Steel was up by 1%, trading at Rs. 1,023 per share, while Jindal Steel & Power surged 5% to Rs. 1,011.45. Tata Steel and SAIL saw gains of 2% each, trading at Rs. 152.50 and Rs. 128.50, respectively. The BSE Metal Index was the top performer among sectoral indices, up by 1%, outperforming the broader market, with the BSE Sensex rising by just 0.09%. Meanwhile, India’s hot-rolled coil (HRC) steel prices have stabilised both week-on-week and month-on-month, aligning with import prices from China. The Indian government is reportedly considering a temporary tax relief on steel imports from China, which could provide additional support to the domestic sector.
JSW Steel reported steady production volumes for November 2024, with its Indian operations producing 2.25 million tonnes of crude steel, marking a 7% YoY increase. Combined group volumes stood at 2.3 million tonnes, up 5% YoY. Analysts predict improved EBITDA per tonne for the company, bolstered by higher volumes, favourable domestic demand, and reduced coking coal costs. ICICI Securities has set a target price of Rs. 1,130 per share for JSW Steel, with a ‘Buy’ rating, citing its strong growth potential in the coming quarters.
