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Domestic Steel Sector: Safeguard duty-led price hike and consistent decline in China’s production to support profitability ahead

ICICIdirect Research 27 Feb 2026 DISCLAIMER

As per the World Steel Association, India’s steel production for the month of January 2026 increased by 10.5% YoY to 15.1 million tons (MT), while China’s production declined by ~14% YoY to 75.3 MT during the same period.

China’s consistent double-digit decline in production (also declined by 10% YoY in December 2025) is positive, as lower output is likely to curb exports, ease global import pressure, and support price stability.

Notably, the government’s imposition of a 12% safeguard duty in mid-December’25 has aided the recovery of domestic steel spot prices, which are trading much higher by ~₹7,000/ton from December 2025 lows of ~₹46,500/ton.

Moreover, coking coal prices have recently declined by ~$20-$25/ton from the high of $245/ton reported in Jan’26, reducing cost pressure and supporting margins ahead.

Consequently, we expect a meaningful EBITDA improvement of more than ~₹2,000 per ton among domestic steel players in Q4FY26.
Thus, we remain positive on the domestic steel space with Tata Steel as our top pick.

We maintain BUY rating on Tata Steel with SOTP-based target price of ₹250 (8.5x/4x EV/EBITDA to India/Europe business on FY28E), supported by its strategic capacity expansion in Indian operation and focus on cost savings across regions.

While we have a HOLD rating on JSW Steel with SOTP based target price of ₹1,300 (8.75x EV/EBITDA on FY28E).

Also, we have a HOLD rating on Jindal Steel with target price of ₹1,200 (9x EV/EBITDA on FY28E).

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