- Steelmakers Brace for Strong Q4 Earnings Despite War Risks
- Domestic steel producers have seen their share prices fall 7–10% since the onset of the West Asia war, mirroring broader market weakness. Yet, Q4FY26 earnings are expected to be strong, supported by higher domestic prices, safeguard duties on imports, robust demand, and improved spreads. Seasonal strength in March and favorable pricing dynamics provide a cushion against input cost pressures.
Pricing & Demand Trends
- Hot Rolled Coil (HRC) spot prices surged 22% over Q3FY26 average to ₹57,700/tonne, still below landed Chinese imports, giving domestic producers an edge.
- Average Q4FY26 HRC price: ₹53,866/tonne, up 14% sequentially.
- Rebar prices rose 21% sequentially to ₹57,196/tonne, benefiting Jindal Steel, where long products dominate sales.
- Domestic finished steel consumption grew 8.8% YoY in Jan–Feb Q4FY26, vs. 3.9% in Q3FY26.
- Imports fell 40%, while exports rose 50%, though exports remain only 4% of output.
Cost & Margin Outlook
- Iron ore prices stable, though NMDC’s March hike could hurt Q1FY27 margins.
- Coking coal costs rose $15–20/tonne (₹1,400–1,900), partially offsetting gains.
- JM Financial estimates Ebitda/tonne to rise ~₹4,500 sequentially in Q4FY26.
- Tata Steel may benefit from firmer European prices under carbon border adjustment mechanism (CBAM) norms effective Jan 2026.
Risks & Constraints
- LNG supply disruptions from West Asia could impact production.
- ICICI Securities expects 2–3% fall in crude steel output, assuming 30–40% drop in gas supplies.
- Exposure limited: only ~6% of ferrous players rely on gas; most depend on coal.
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