Demonstrating strong institutional conviction in domestic industrial demand, domestic brokerage house Motilal Oswal Financial Services has reiterated a robust bullish stance on the Indian steel sector despite intermittent seasonal headwinds. The brokerage's latest thematic equity research underlines that domestic finished steel realisations remain on firm ground, underpinned by historic low channel inventories, regional supply bottlenecks, and firming raw material input costs. While international steel production, particularly across Chinese mills, has slipped into contraction territory, India's buoyant domestic infrastructure push and capital goods consumption continue to decouple the domestic steel market from global softness, positioning primary metal producers for healthy margin expansion over the medium term.

Domestic Realisations Climb: HRC, CRC, and Rebar Prices Advance Sharply

Reflecting tightening market balances, domestic benchmark prices for flat and long steel products have recorded sharp month-on-month gains across primary distribution hubs. The domestic price of Hot Rolled Coil (HRC) has advanced roughly 7 percent on a month-on-month basis to reach approximately ₹62,000 per metric tonne. Concurrently, value-added Cold Rolled Coil (CRC) quotes have touched ₹70,500 per tonne, reflecting an 8 percent increase over the prior month. The rebound is most noticeable in long products, with primary construction rebar surging to ₹56,800 per tonne—marking a massive 16 percent expansion from its June trough of ₹48,850 per tonne. Analysts observe that this contra-seasonal pricing strength during monsoon-dampened construction months signals strong structural demand that could expand corporate operating EBITDA margins once quarterly volume sales accelerate.

India Steel Demand Jumps 7.2% as China and Global Output Shrink

According to empirical data cited by Motilal Oswal, India's domestic steel consumption recorded a stellar 7.2 percent year-on-year growth during the April to August period. This domestic surge stands in sharp contrast to global metal output, which contracted by 0.6 percent over the same duration, weighed down heavily by China, where overall steel production contracted roughly 3.1 percent year-on-year amid persistent property sector stress. Looking ahead, the brokerage anticipates construction, automotive, and capital goods demand to accelerate significantly in the second half of fiscal year 2027 (2HFY27) as post-monsoon construction activity hits peak momentum. Backed by this visibility, Motilal Oswal reaffirmed JSW Steel and Tata Steel as its premier conviction bets, assigning an aggressive target price of ₹1,340 per share for JSW Steel and ₹220 per share for Tata Steel.