Tata Steel, Jindal Steel, JSW Steel: Nomura on safeguard duty-driven price recovery

Foreign brokerage Nomura in its latest note on Indian steel sector maintained its 'Buy' rating on Tata Steel, Jindal Steel and JSW Steel saying India's steel sector is underpinned by improving domestic price momentum despite global headwinds. On a global level, it believes China’s anti-involution measures have started yielding results, with monthly crude steel production since April 2025 trending at the low end of the five-year average, compared to the peak levels observed in March 2025. 

"While structural challenges persist, we expect incremental policy support from China, particularly in the form of property-focused stimulus. Domestically, we believe the recent weakness in consumption is more seasonal than structural. We expect growth momentum to pick up in FY27–28F, driven by recovery in autos, infrastructure expansion, manufacturing growth, and resilient end-user industries," it said.

Nomura upped it target on JSW Steel to Rs 1,340 from Rs 1,300 earlier. It suggested a target of Rs 215 on Tata Steel and Rs 1,150 on Jindal Steel. Jindal Steel (19 per cent), Jindal Steel (10 per cent) and Tata Steel (1 per cent) are trading at premiums over their three-year averages, it noted.

Nomura said the domestic HRC prices have firmed up meaningfully following the three-year safeguard duty extension, which aims to curtail low-priced imports and impose pricing discipline across the market. 

"Additionally, due to improving market sentiment and rising cost pressures from higher imported met coke prices, compounded by a weak rupee, spot HRC prices rose to Rs 52,400 per tonnes, up 11 per cent against Q3 average of Rs 47,100 per tonne. The extension of safeguard duties has structurally improved domestic pricing power," it said.

Nomura said  China’s weak domestic demand and export-heavy stance continued to influence the trade flows and pricing dynamics. 

"Indian HRC spot margins in January 2026 have improved by 14 per cent or Rs 4,000 per tonne to over Rs 32,000 per tonne, vs the 3QFY26 average, driven mainly by: (1) safeguard duty extension by the government, and (2) escalating coking coal prices. This implies prices hikes more than offset cost pressures," it said.

Domestic consumption of steel continued to grow at a steady pace in Q3, Nomura said adding that India's finished steel consumption grew 4.6 per cent YoY to 40.74 mt, while crude steel production rose 10 per cent YoY to 42.5 mt.

Meanwhile, European steel industry continued to face pressure, with only marginal improvement in spot HRC prices of 2.5 per cent or 15 euros per tonne compared to the average levels seen in Q3. While prices have inched up sequentially, spot HRC margins have marginally declined 1 per cent to 362 euros per tonne.