Rakesh Arora, Founder of GoIndiaStocks.com, believes metal stocks have seen a correction of 20 to 30% and are heading into Q1 results that will be very strong. However, he warns that the good news is already reflected in share prices and expects earnings downgrades in the coming quarters as commodity prices soften. According to reports from CNBC TV18, Arora suggests that metal stocks may be oversold but warns they will not return to previous highs quickly.
Arora's biggest concern centers on aluminium prices, which he expects to fall to around $2,600 from current assumptions of $3,200 per tonne. As reported by CNBC TV18, he believes fresh supply from the Middle East and Indonesia will enter the market, triggering an earnings downgrade cycle for aluminium producers. The expert warns that rising exports from China and aggressive capacity expansion by Indian steelmakers could create excess supply, keeping margins under pressure.
Despite expecting Vedanta to report healthy April-June quarter 2026 numbers, Arora believes the steel sector has already passed its pricing peak. According to CNBC TV18 reports, rising exports from China and aggressive capacity expansion by Indian steelmakers could create excess supply, keeping margins under pressure. However, recent market data shows India's HRC spot margin stood at around ₹34,285 per tonne in June, remaining "well above the median margin level observed over the past two years."
SAIL CMD Panda has warned that iron ore costs are set to rise significantly due to increased taxes and royalty burdens from state governments. Speaking at the Indian Steel Market Conference, Panda stated that "Iron ore was cheap but it will not be cheap going forward because of imposition of so many taxes and unmindful royalties from the state governments." Iron ore miners currently pay a uniform ad valorem royalty rate of 15% of the average sale price, plus additional contributions to District Mineral Foundation and National Mineral Exploration Trust. SAIL fulfilled its entire iron ore demand of 25.93 Million Tonnes during April 2025 to December 2025 through its captive mines.
Despite the broader market concerns, Nomura has reiterated its 'Buy' ratings on Tata Steel, JSW Steel, Jindal Steel and Power, and Lloyds Metals & Energy, expecting these companies to benefit from earlier price hikes implemented in late Q4FY26 and through Q1FY27. As per Moneycontrol, the brokerage believes these price increases are "more than sufficient to absorb any cost inflation arising from the West Asia crisis." Nomura expects Indian steel majors to report sequential EBITDA per tonne improvement in 1QFY27F, with margins expanding quarter-on-quarter as the lagged benefit of earlier price increases flows through to earnings.
India's steel industry faces significant challenges as the country expands steel-making capacity to 300 million tonnes from the current 200 million tonnes. Panda highlighted that while India is increasing mining capacity to make more iron ore available, the cost of raw materials is changing significantly. The industry must also address decarbonisation challenges, including carbon levies under the Carbon Border Adjustment Mechanism, requiring better operational practices, newer technologies, and lower fuel consumption. India's steel consumption is growing at 7-8% annually, with the sector needing to balance expansion with environmental considerations.
