Morgan Stanley expects Indian steel stocks to remain on an outperformance trajectory over the coming months, despite an anticipated short-term easing in prices associated with the monsoon season.
The brokerage noted that steel shares have advanced by about 15% so far this year, while the broader BSE Sensex has fallen roughly 11% over the same period. Morgan Stanley retained a constructive medium-term view on steel margins, citing a combination of government intervention, favorable demand prospects and China’s anti-involution measures as underpinning factors.
On prices, domestic hot-rolled coil (HRC) traded at Rs57,800 per tonne in the latest weekly comparison, effectively flat week-over-week and approximately 26% higher than the mid-December trough. Rebar prices softened by about 3% during the week to Rs45,900 per tonne, though they remain around 8% above mid-December levels.
The report highlighted that domestic HRC currently trades at a 9% discount to import parity prices when the safeguard duty is factored in. Morgan Stanley attributed part of the spread expansion to the government’s imposition of the safeguard duty, which has supported domestic pricing dynamics.
April data showed an uptick in steel imports, prompting inventory restocking according to Joint Plant Committee figures. Morgan Stanley expects the restocking cycle to continue as the monsoon season approaches and production ramps up following recent capacity additions.
On raw materials, China CIF iron ore prices for 61% Fe fell by roughly 4% during the week to about $110 per tonne. Domestic iron ore prices were noted to be trading at a 54% discount to parity, compared with a five-year average discount of 56%.
Australian hard coking coal prices were steady at approximately $241 per tonne, up about 4% month-over-month. Domestic spreads for coking coal contracted around 1% during the week, but remain near a 27% gain since mid-December lows, while being about 11% below the April 2026 peak.
Contextual analysis
The combination of domestic policy support, import-adjusted pricing and input-cost movements frames Morgan Stanley’s expectation that steel equities will outperform despite cyclical near-term price softness tied to the monsoon. Inventory restocking and capacity additions are cited as operational factors that could sustain the restocking cycle into the near term.
All figures and outlooks above are taken from the bank’s assessment and the latest price and Joint Plant Committee data referenced in its review.