Metals And Mining Q1 Preview: Ferrous To Shine, Non-Ferrous To See Lower Realisations
Key things to watch in the ferrous space includes steel realisations, volume guidance for this financial year and updates on ongoing expansion project, said CLSA.
The first quarter of fiscal 2026 paints a mixed picture for the metals and mining sector, with ferrous metals anticipated to deliver a stronger performance compared to non-ferrous metals.
Steel On Upswing
The ferrous segment is expected to perform better in the first quarter of fiscal 2026, largely driven by an improvement in Hot Rolled Coil prices. Domestic HRC prices saw a healthy 6% sequential increase, which is significantly aided by the implementation of safeguard duties. This is expected to translate into a rise in Ebitda for steel producers.
Steel imports have seen a sequential decline indicating a more favourable domestic demand environment. The expansion in realisations is a key highlight, with the 12% interim safeguard duty imposed in April, leading to a sharp expansion in domestic HRC prices. The coking coal prices fell by 10% on average in the last quarter of financial year 2025 and are expected to remain range-bound in the first quarter, offering some cost benefits. However, these benefits could be largely offset by a 5% uptick in iron ore prices, according to Morgan Stanley.
Individual steel players like Tata Steel Ltd. and Jindal Steel Ltd. are set for a profitability boost. Crude steel production in India grew by 10% YoY during the quarter, indicating robust demand. Domestic volumes are expected to remain strong, while exports remained muted due to unfavourable prices, Morgan Stanley noted.
Key things to watch in the ferrous space includes steel realisations, volume guidance for this financial year and updates on ongoing expansion project, said CLSA.
Non-Ferrous: Headwinds From Lower Realisations
In contrast, the non-ferrous segment is likely to experience a sequential decline in profitability, primarily due to lower commodity prices. Consequently, Ebitda for non-ferrous players is expected to fall on lower realisations.
For Hindalco Industries Ltd., its US subsidiary Novelis continues to face headwinds on account of tariffs. Indian operations are expected to face challanges due to weaker aluminum prices and lower alumina realisations, CLSA said.
Hindustan Zinc's Ebitda is expected to plunge owing to a fall in zinc and lead prices. Vedanta is also expected to face a similar scenario on account of lower commodity prices, according to the brokerage.
Mining: Mixed Outlook
Coal India's Ebitda is likely to plunge due to lower volume and blended realisation. Muted power demand may also cap the outlook. However certain things to watchout include growth outlook, e-auction realisations and capex guidance, CLSA noted.
NMDC, on the other hand, is set to record an increase in Ebitda, driven by higher sales volume, which is partially offset by lower iron ore prices. Domestic iron ore prices moved higher during the quarter for the company, Morgan Stanley said.
