Metal stocks glitter on Dalal Street, eye stronger March quarter

ET Intelligence Group: The BSE Metal Index has jumped 13% in the past three months, outperforming nearly 2% drop in the Sensex amid a broad rally across ferrous and non-ferrous stocks. Shares of metal companies have surged up to 33% over the past three months amid rising prices of both ferrous and non-ferrous metals due to a combination of factors such as demand recovery, policy support, and supply constraints.

Domestic steel prices have rebounded sharply from their December lows after the government reinstated the safeguard duty- which had expired in November- for three years starting from the end of December. This lifted the sentiments for domestic steel manufacturers as imports declined and prices firmed up.

Domestic steel prices have rebounded since December, with average Q4 hot-rolled coil (HRC) prices rising by about ₹5,300 per tonne or 2% quarter-on-quarter and primary rebar prices increasing by roughly ₹8,200 per tonne or 3%. Steel firms have also announced ₹1,000-2,000 per tonne price increase in early January.

In addition, steel exports strengthened as European Union buyers engaged in pre-emptive restocking ahead of the Carbon Border Adjustment Mechanism (CBAM), which came into effect on January 1, 2026. Under CBAM’s transition phase, EU importers are required to start reporting emissions of imported steel, and once the full regime begins, they will have to pay for the embedded carbon. To avoid these future costs and uncertainties, many EU buyers front-loaded their purchases from India.

In non-ferrous metals, supply disruptions in key mining regions such as Chile, Peru and Indonesia have pushed up copper and nickel prices. Several global aluminium smelters faced outages, keeping supply tight. Demand remains strong, especially as China has capped its aluminium capacity at 45 million tonnes.

Analysts expect steelmakers to report stronger earnings for the March quarter in the light of higher prices, strong volumes and improved operating performance, while non-ferrous producers are likely to benefit from firm global prices and robust demand.

“For Q4, realisations for steel companies are expected to improve by ₹2,500-4,500 per tonne. This will be partially offset by higher coking coal costs, which could increase by ₹1,300-1,600 per tonne of steel,” Parthiv Jhonsa, lead analyst (metals & mining), Anand Rathi Institutional Equities, told ET. He added that for non-ferrous companies, elevated global prices and rupee depreciation will support earnings in the March-quarter since their revenues are dollar denominated. The current quarter is also typically the strongest volume quarter for metals, and most steel companies have maintained their volume guidance. “Aluminium fundamentals remain stronger, supported by the limited scope for incremental production in China and firm copper prices,” said Elara Capital in a report.