The rally comes after a decline of about ₹12,000 per tonne between May and July, driven by lower construction activity during the monsoon. Rebar prices have since recovered by ₹6,000-6,500 per tonne and now stand at ₹54,500 per tonne, still below the ₹58,000-59,000 per tonne level seen in April.
A rise in coking coal costs, a key raw material used to make steel, is adding to the case for further price increases. Coking coal costs are up nearly 20% in the past month, as China has returned to the seaborne import market following mine disruptions from safety inspections and a mining accident in June.
Murarka pointed to mill shutdowns as the immediate trigger for the price rebound. High-cost producers turned unprofitable in early July, when prices bottomed out, prompting several to pause operations. The resulting supply cut, combined with dealers restocking inventory as prices rose, has pushed prices higher through what Murarka called a second leg of the rally.
Not all of the price gains will show up as profit for steelmakers, since India imports most of its coking coal. Murarka estimated that around 70% of the recent price rise could flow through to margins, since Indian mills blend the costlier coking coal with cheaper alternatives such as PCI (pulverised coal injection) and local coal.
He expects the impact of the coking coal cost rise to show up more in the October-December 2026 quarter than the current one (July-September 2026 quarter), but said the net effect on spreads should still be positive.
Long steel currently trades at a ₹5,000 per tonne discount to flat steel products such as hot-rolled coil (HRC), down from a gap of ₹10,000-11,000 per tonne after the earlier correction. Murarka does not expect the gap to narrow much further, since flat steel carries an 11.5% safeguard duty that does not apply to long steel — a duty-driven gap of roughly 10%.
He also noted that Chinese steel spreads have fallen to three-to-four-year lows of around $85 per tonne, which could push Chinese producers to raise prices and add further support to Indian HRC prices.
Murarka said Axis Capital favours Jindal Steel over Steel Authority of India Ltd (SAIL) for exposure to the long steel rally. “Jindal Steel has more legs, or drivers, beyond just the long pricing,” he said, citing volume growth and margin-improvement measures expected to play out over the next 12 to 18 months.
He was less positive on SAIL, flagging upcoming wage revisions and limited volume growth over the next three to four years, along with valuations that he does not see as supportive after the stock’s recent rise from ₹165-170 to ₹195.
For the broader sector, Murarka named JSW Steel as the structural pick. “Our structural pick is JSW Steel, which we believe will continue to execute the best in the sector with a 10% plus volume compound annual growth rate (CAGR) over four, five years,” he said. CAGR measures the average yearly growth rate over a period of time.
For the full interview, watch the accompanying video
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