Morgan Stanley sees India steel stocks continuing gains

Investing.com -- Morgan Stanley reported that Indian hot-rolled coil prices increased about 1% week-over-week to Rs58,500 per ton on Friday, marking a 27% rise since mid-December lows. Secondary rebar prices climbed approximately 2% week-over-week to Rs45,400 per ton, up 6% from mid-December lows.

Domestic HRC prices traded at roughly a 5% discount to import parity prices, including safeguard duty, unchanged from the previous week. China CFR iron ore prices for 61% Fe content remained stable week-over-week at around $96 per ton, with domestic prices trading at about a 51% discount versus parity, compared to a five-year average of 55%.

Australian hard coking coal prices rose approximately 10% week-over-week to around $250 per ton, up 12% month-over-month, likely driven by ongoing supply shortages related to Shanxi disruptions. Domestic spreads narrowed by roughly 2% during the week, down about 9% since the April 2026 peak but up around 30% from mid-December lows.

The bank noted that imports increased in recent months, but expects them to normalize as domestic prices remain below import parity. Good demand and slower production, partly due to seasonal maintenance shutdowns, led to inventory destocking in recent months. The bank anticipates some restocking in coming months as production increases following capacity additions.

Steel stocks gained 8% year-to-date compared to the Sensex's 9% decline. Morgan Stanley said steel prices may weaken near term during monsoon season, potentially affecting stock performance. The bank maintains a positive outlook on steel prices and spreads over the medium term based on government support, supply-demand balance, and China's anti-involution measures.

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