- India's hot-rolled coil prices rose 10% since July, now 3% above import parity
- Morgan Stanley expects steel imports to normalize as domestic prices surpass imports
- Steel spreads hit Rs 39,000/tonne, near April peak and 43% above December lows
India's hot-rolled coil (HRC) prices have caught up with the cost of imported steel, and brokerages now differ on what that means for steel stocks. Morgan Stanley's India Steel Tracker report for September puts domestic HRC at Rs 63,750 a tonne, up about 10% since end-July. That is a 3% premium to import parity, the landed cost of imported steel including the safeguard duty, a temporary levy meant to protect local producers. HSBC also says retail HRC prices are up 10% in three months and broadly at parity with landed prices.
Imports Set To Normalise, Spreads Near April Peak
Morgan Stanley expects imports, which were elevated in recent months, to normalise now that domestic prices sit above import parity. It says the safeguard duty has supported prices and widened spreads, the gap between steel prices and the cost of iron ore and coking coal. Spreads rose about 1% on the week to Rs 39,000 a tonne, around the April 2026 peak and about 43% above the mid-December lows.
Steel stocks on the radar.
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Morgan Stanley Sees 12-Month Upside, HSBC Warns Of Near-Term Dip
On the stocks, Morgan Stanley is upbeat. "We expect steel stocks to continue to do well in the next 12 months," it wrote. Steel shares are up 10% this year, while the Sensex is down 14%. The brokerage bases its medium-term view on government support, a balanced supply-demand picture and China's anti-involution campaign, which aims to curb ruinous price competition and overcapacity.
HSBC is more cautious on the near term. It says muted regional price increases could pull trade prices, the retail-market rates for steel, and steel stocks lower over the next 2-3 months. Indian steel stocks have rallied on the back of trade price hikes, and HSBC says the rally needs China to raise its own HRC prices. Morgan Stanley's data show China's domestic HRC at US$491.9 a tonne, flat on the week and down 1% on the month.
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Coking Coal Sets The Companies Apart
Coking coal is the other swing factor. Australian hard coking coal (HCC) is at US$276 a tonne, down 2% on the week but up 28% since end-July, with supply disruptions in China keeping prices high, according to Morgan Stanley. HSBC expects restarts of mines in China's Shanxi province to cool prices.
That matters differently for each company. HSBC prefers Tata Steel and JSW Steel for their high exposure to flat products such as HRC. It says Tata Steel and Jindal Steel have lower coking coal exposure, while SAIL has the highest. Morgan Stanley's coverage list shows Overweight on Tata Steel, JSW Steel and Jindal Steel and Underweight on SAIL. Overweight is a relative rating, meaning the stock is expected to beat its coverage universe over 12 to 18 months, and Morgan Stanley says it is not the same as a Buy. On September 24, Tata Steel was at Rs 188.02, JSW Steel at Rs 1,273.20 and SAIL at Rs 184, per Morgan Stanley's list.
Both brokerages point to the same markers: China's steel prices and coking coal costs. Morgan Stanley adds that how spreads behave after the monsoon will drive stock performance, and it expects some restocking as output rises after capacity additions.
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