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Domestic to remain above 90 per cent over the medium term, led by robust demand, ~7 per cent CAGR over FY2026-29E, outperforming capacity additions, according to a research report by Kotak Institutional Equities.
The report noted that consumption trends across the country continue to show stability, supported by healthy industrial and infrastructure activity. "Domestic demand continues to be healthy at 7.8 per cent yoy growth in YTDFY27. This follows 7.7 per cent yoy growth in FY2026 after four successive years of double-digit growth," the report stated. On the external trade front, outbound shipments rose sharply off a lower base, while inbound shipments recorded a higher volume over the same duration. "Exports increased 35 per cent yoy on a weak base to 2.3 mn tons, but were outpaced by imports of 2.8 mn tons, +36.7 per cent yoy YTDFY27," the report added, highlighting that trade remedies remain underway. "Ongoing investigations into anti-dumping duty against imports should keep imports in check." Regarding product pricing, long steel prices show a visible rebound over recent weeks, reversing the downturn witnessed during the early part of the monsoon. "Long steel prices have recovered by 12 per cent over the past month, reversing the sharp correction during June-July 2026. Domestic market tightness and favorable seasonality with a receding monsoon should elevate prices further," the report said. The report highlighted that spot primary and secondary rebar prices gained around Rs 5,600 per ton, reaching Rs 53,900 per ton and Rs 47,900 per ton, respectively. Although these levels remain about Rs 6,000 per ton below the highs recorded in April 2026, improving seasonal conditions provide further price support. In the flat steel segment, domestic hot rolled coil (HRC) prices trade at Rs 58,800 per ton, sitting at an approximate 3 per cent discount to import parity. The report pointed out that weak Chinese steel spreads caused by cost inflation raise the probability of higher regional steel prices in the coming period. Meanwhile, input costs display divergent trends across raw material categories. Coking coal prices gained around 5 per cent over first-quarter levels due to supply constraints, including mine accidents in China and lower Russian production stemming from diesel shortages. In contrast, domestic iron ore fines prices fell by approximately 7 per cent from June exit levels, matching the broader softness in seaborne iron ore markets. "We expect steel margins to soften sequentially in 2QFY27E; however, recent price recovery and operating leverage should help margins to recover in 2HFY27E," the report stated, adding that lower iron ore prices provide relief to non-integrated producers while companies such as JINDALST and SAIL stand to benefit from the ongoing long steel recovery. (ANI)
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