India's ferrous steel sector outlook for FY27 has improved due to firm steel prices and tighter supplies, according to Emkay Research. Recovering rebar prices and resilient HRC prices point to a more favourable pricing environment than expected.
Improved Outlook for FY27
Firm steel prices and tighter supplies have improved the outlook for India's ferrous steel sector for FY27, with stronger rebar and hot-rolled coil (HRC) prices pointing to a more favourable pricing environment than previously expected, according to Emkay Research.
The brokerage said the outlook had become more constructive as rebar prices recovered sharply and HRC prices remained resilient, while elevated iron ore and coking coal costs were supporting price discipline across the industry. "The ferrous outlook has turned more constructive than our earlier assumptions," Emkay said, adding that the improving pricing environment across both long and flat steel "points to a stronger FY27 outlook for the ferrous complex than previously anticipated."
Rebar Prices Surge on Supply Constraints
Rebar prices rose to Rs 54,500 per tonne from a trough of Rs 47,900 per tonne in the last week of July, marking a 13.8 per cent increase in less than a month. Emkay attributed the recovery largely to supply constraints caused by maintenance shutdowns, while healthy retail offtake and continued infrastructure activity provided support to demand. The brokerage expects rebar prices to remain firm in the near term as inventories remain manageable and supply constraints persist. However, it said the sustainability of current prices and any further gains would depend increasingly on a broader recovery in retail and project-led demand as the monsoon recedes.
HRC Outlook Strengthens
The outlook for HRC has also strengthened. HRC averaged Rs 58,328 per tonne in FY27 so far, 6.1 per cent above Emkay's FY27 base-case assumption of Rs 55,000 per tonne. The benchmark price also rose to Rs 59,400 per tonne over the past month. HRC prices have been supported by tighter availability and controlled dispatches, with a higher share of volumes going to the automobile sector. Emkay noted that domestic HRC was trading at a 5.6 per cent discount to Chinese import parity, indicating limited downside risk and scope for further price normalisation.
Cost Pressures Provide Price Floor
On the cost side, tighter iron ore availability due to monsoon disruptions and lower auction volumes, along with higher coking coal prices, are expected to provide a stronger floor for domestic steel prices.
"While the rebar recovery has been largely supply-led, HRC prices remain supported by resilient automotive demand and improving underlying market fundamentals," the report said. The report further expects the pricing environment to remain supportive, although a broader pickup in demand will be important to sustain the recent gains. (ANI)
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