Metal stocks shine on Dalal Street, eye stronger March quarter

ET Intelligence Group: The BSE Metal Index has risen 13% in the past three months, outperforming the Sensex’s nearly 2% decline amid a broad rally between ferrous and non-ferrous stocks. Shares of metals companies have risen up to 33% in the past three months due to 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 recovered sharply from their December lows after the government reinstated the safeguard duty – which expired in November – for three years from the end of December. This improved sentiment among domestic steelmakers as imports fell and prices rose.

Domestic steel prices have recovered since December, with average hot-rolled coil (HRC) prices rising by about ₹5,300 per tonne or 2% quarter-on-quarter in the fourth quarter, and primary reinforcement prices rising by about ₹8,200 per tonne or 3%. Steel companies have also announced a price hike of ₹1,000-2,000 per tonne in early January.

In addition, steel exports increased as European Union buyers engaged in preventative stock replenishment in the run-up to the Carbon Border Adjustment Mechanism (CBAM), which came into effect on January 1, 2026. During the transition phase of CBAM, EU importers must start reporting emissions from imported steel, and once the full regime comes into effect, they will have to pay for the embedded carbon. To avoid these future costs and uncertainties, many EU buyers have front-loaded their purchases from India.

In non-ferrous metals, supply disruptions in key mining regions such as Chile, Peru and Indonesia have pushed copper and nickel prices higher. Several aluminum smelters worldwide suffered disruptions, keeping supply tight. Demand remains strong, especially as China has limited its aluminum capacity to 45 million tons.

Analysts expect steelmakers to report stronger profits for the March quarter on the back 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 the fourth quarter, results 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 rise by ₹1,300-1,600 per tonne of steel,” Parthiv Jhonsa, principal analyst (metals and mining), Anand Rathi Institutional Equities, told ET. He added that for non-ferrous companies, higher global prices and rupee depreciation will support earnings in the March quarter as 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. “Aluminum fundamentals remain stronger, supported by limited incremental production opportunities in China and firm copper prices,” Elara Capital said in a report.