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Informist, Friday, May 29, 2026

MUMBAI – Shares of metal companies, particularly ferrous, are likely to trade higher at least till the war in West Asia is resolved, analysts said. This was because the supply chain disruptions induced by the war aided steel prices, leading to better realisations, analysts said. While some analysts see rising coking coal costs, a key raw material for steel companies, as putting pressure on margins, others expect the companies to offset this by raising prices. However, technical analysts expect the metal index to move in a range in the coming week.

"I think we are near the 22-week high prices (of steel)... so, that has seen all the steel companies to have higher realisations, which in turn also result in higher margins for the companies," Ajit Sahu, research analyst at IDBI Capital, said. "... although the raw material price has also increased... on a net basis, steel companies get benefited from the ongoing thing," Sahu added. 

Analysts also said there has been sustained demand throughout the June quarter, which has given companies enough room to hike steel prices. However, in the medium term, there could be risks to demand from the onset of the monsoon, which could affect company performance during the September quarter, analysts said. Some analysts also said that the persistence of war in West Asia could slow infrastructure activity, as the government would focus on protecting the economy from the war's repercussions through higher subsidies.

Moreover, an accident at the Liushenyu coal mine in China's northern province of Shanxi, which killed several people, has raised concerns about regulatory response from the authorities and some production losses. While the mine's capacity is small at 1.2 million tonnes, the accident could trigger an aggressive safety review across Chinese coal operations, according to Nomura Financial Advisory and Securities. If Chinese buyers turn to Australia for coal supplies, raw material prices could rise materially in the near term and put pressure on the margins of Indian steelmakers, who meet most of their coking coal needs through imports, Nomura said.

"Any rise in coking coal prices due to shutdown of few mines post Chinese accident could put pressure on steel producers as they will have to increase steel prices to protect their margins amid seasonally weaker period," Tushar Chaudhari, lead research analyst at brokrage Prabhudas Lilladher said. Chaudhari expects the Nifty Metal index to underperform the headline indices in the near term due to concerns about "demand destruction", if the war in West Asia extends further. 

The Nifty Metal Friday closed at 13440.95 points, down 277.35 points or 2%. Adani Enterprises and Welspun Corp. were the top gainers among the index constituents, ending 8% higher, whereas Jindal Stainless and APL Apollo Tubes were the underperformers. The Nifty Metal index is expected to move in a range in the coming week, with support level seen at 12800 and resistance at 13900, according to Vipin Kumaar, assistant vice president, technical and fundamental research at Globe Capital Market.

While metal prices have risen in the non-ferrous space since the war in West Asia started, it has also increased the risk of a correction in commodity prices. Stocks of non-ferrous companies may come under pressure for the above reason, an analyst at a domestic brokerage said. "... currently the move has already been there in the (share) price (in non-ferrous) but ferrous space we feel the move is still pending," the analyst said.

Chaudhari expects aluminium prices to remain firm, largely due to supply disruptions in West Asia, which accounts for around 9% of global aluminium production. The damage to aluminium smelting facilities in the region could take around 12-14 months to be addressed, which should support prices. Hence, the aluminium companies are expected to remain strong, he said.

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The following are the resistance and support levels for key metal stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Ashutosh Pati

Edited by Saji George Titus

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