As steel prices surge, Motilal Oswal Financial Services sees the domestic steel cycle shifting from a volume-led recovery to pricing and cost-led earnings growth. In its latest report released on Thursday, the brokerage said prices have remained firm in the ongoing second quarter of FY27 despite seasonal weakness, supported by lean channel inventories, maintenance-led supply constraints and rising input costs.

Domestic hot-rolled coil (HRC) prices jumped 7% month-on-month to a four-year high of Rs 62,000 per tonne in September, while cold-rolled coil (CRC) prices rose 8% MoM to Rs 70,500 per tonne. Rebar prices also recovered sharply to Rs 56,800 per tonne in September, from Rs 48,850 per tonne in June.

This rally signals a broad-based pricing strength across both flat and long products, Motilal Oswal said. The domestic brokerage attributed the improvement in steel prices mainly to cost pass-through, adding that input costs (coking coal, iron ore and pellet) have simultaneously increased, raising the cost base for steelmakers.

Premium Australian coking coal price has risen to $300 per tonne from $260 per tonne in June 2026, implying that every $10 per tonne increase in coking coal adds nearly $7-8 per tonne to input costs, creating a margin headwind. 8 MTStrong steel demand outpaces production growthDomestic steel volumes, meanwhile, remained fundamentally healthy.

3 million tonnes, according to the brokerage. The faster growth in consumption relative to production has kept the domestic market relatively tight, it added.

Motilal Oswal noted that the global volume backdrop is equally supportive from a supply perspective. 1% YoY to nearly 577 mt.

The structural decline in Chinese steel output is important for global market balance given China’s major role in global steel production and exports, the domestic brokerage noted. Why Motilal Oswal is constructive on domestic steel pricing“In the near term, we remain constructive on domestic steel pricing as we believe the domestic steel cycle is transitioning from volume-led recovery to pricing and cost-led earnings growth.

Lean inventories, constrained supply, resilient underlying consumption and global cost inflation provide the foundation for higher steel prices. If postmonsoon demand normalizes as expected, the sector could enter 2HFY27 with a considerably stronger realization environment than the current consensus assumptions imply,” Motilal Oswal said.