Steel shares surged up to 6% as dollar weakness spurred commodity demand.
China’s planned output cuts may reduce cheap steel dumping, aiding Indian mills.
CLSA raised earnings outlook, staying most bullish on aluminium.
Shares of steel manufacturers were buzzing in trade on September 3, surging as much as 6% as a weakened dollar spurred demand for the commodity.
Among steel players, Tata Steel emerged as the frontrunner with its near 6% surge, followed by SAIL, JSW Steel and Jindal Steel and Power, all of which were up 3-5%. Not just that, solid gains across metal exporters also lifted the benchmark Nifty Metal index nearly 3% higher.
“Generally, when the dollar weakens, international buyers of commodities can buy more units for $1 as the commodities are traded in dollars. This comes as positive news for Indian metal producers as the demand increase could indicate improved production for the Indian mills,” Anubhav Sangal, Senior Research Analyst at Bonanza.
For Indian metal companies, the weakened dollar has led to an upward Ebitda revision for the metal producers in India for FY26, Sangal added.
The US dollar has seen recent weakness amid rising expectations of a rate cut by the Federal Reserve at it upcoming September meeting. "Already, the labour market is softening, and Chair Powell has signalled the possibility of rate cuts at Jackson Hole," a recent report by DBS, cited by Reuters said.
With the dollar still seen as overvalued, DBS added that expectations of policy easing could drive the currency lower in the months ahead.
Adding to the tailwind, China, the world’s largest steel producer is reportedly looking to trim output between 2025 and 2026 as part of its push to tackle overcapacity. For India, that could mean less dumping of cheap Chinese steel and more breathing room for local producers.
Brokerage CLSA believes the setup could boost profitability. “We expect spreads to improve and Indian mills to see a rise in their margins,” the firm noted.
Accordingly, CLSA has also fine-tuned its estimates for the sector, adjusting FY26–28 Ebitda projections for metals and mining companies by -4% to +8%. Within the pack, the brokerage remains most bullish on aluminium, pointing to a tighter demand-supply balance in the coming years.
