Metal Stocks Glitter on Dalal Street, Eye Stronger March Quarter
Analysts are optimistic about the upcoming earnings reports for steelmakers in the March quarter, attributing their positive forecasts to higher prices, robust volumes, and enhanced operating performance. Non-ferrous producers are also set to gain from strong global prices and solid demand.
Key Insights on Metal Stocks
– The BSE Metal Index has surged 13% over the past three months, significantly outperforming the 2% decline in the Sensex amidst a widespread rally in ferrous and non-ferrous stocks.
– Shares of metal companies have experienced impressive gains of up to 33% in the same period, driven by escalating prices of both ferrous and non-ferrous metals. Contributing factors include:
– Demand recovery
– Policy support
– Supply constraints
Factors Driving Steel Prices
– Domestic steel prices have sharply rebounded from their December lows, following the government’s reinstatement of the safeguard duty, which had lapsed in November. This duty will be effective for three years from late December, fostering positive sentiment among domestic steel manufacturers as imports dwindled and prices began to firm up.
– During the March quarter, average prices for hot-rolled coil (HRC) have risen by approximately ₹5,300 per tonne (2% quarter-on-quarter), while primary rebar prices have seen an increase of around ₹8,200 per tonne (3%).
– Additionally, steel firms announced price hikes of ₹1,000-2,000 per tonne in early January.
Export and Demand Trends
– Steel exports have seen a boost as buyers from the European Union engaged in preemptive restocking ahead of the Carbon Border Adjustment Mechanism (CBAM), introduced on January 1, 2026. During its transition period, EU importers are required to report emissions from imported steel. Once fully implemented, they will need to pay for embedded carbon, prompting many buyers to front-load their purchases from India to mitigate future costs and uncertainties.
Dynamics in Non-Ferrous Metals
– Significant supply disruptions in essential mining regions, particularly in Chile, Peru, and Indonesia, have led to rising copper and nickel prices. Several global aluminum smelters are facing outages, contributing to a tight supply situation.
– Demand for non-ferrous metals remains strong, especially since China has capped its aluminum capacity at 45 million tonnes.
In conclusion, the March quarter is shaping up to be one of the strongest for metal stocks, buoyed by a combination of favorable pricing, solid demand, and strategic market adjustments. As a result, the prospects for both steelmakers and non-ferrous producers are shining bright on Dalal Street, promising a promising future for investors and stakeholders alike.