Shares of steel companies are on investors’ radar once again and stocks from this sector are trading close to their 52-week high.
The bullishness for steel stocks comes at a time when the Chinese government is taking steps to regulate over production of this metal. In addition, the central government’s plans to impose a 12% safeguard duty on certain steel imports over next three years is also expected to help the domestic steel industry deal with any surge in steel imports.
The hardening of steel stocks is clearly visible.
JSW Steel was down 0.4 % on Wednesday to Rs 1,101.4, and it was not too from its 52-week high of Rs 1,114.85 that was reached on 10 September 2025. Similarly,
Tata Steel was broadly flat at Rs 169 on Wednesday, and not too far from its 52-week high of Rs 172.45 that was reached on 8 September 2025.
Jindal Stainless gained 1.5% at Rs 780 on Wednesday, and not too far from its 52-week high of Rs 818.2 that was reached on 25 August 2025.
The bull case: A three-pronged push
China’s production curbs
Global media reports indicate that the Chinese government is looking at “precise regulation of capacities,” and closure of obsolete equipment. And it is understood that while there are no specific targets of reduction in steel capacity in China, analysts highlight that it could result in about 25 million tonnes reduction in steel produced in that country.
China is the world’s biggest steel producer globally, and its steel production fell 3.1% y-o-y to 594.5 million tonnes during January to July 2025, according to industry body, World Steel Association.
India’s tariff shield
In India too, the Director General of Trade Remedies (DGTR) has recommended final imposition of safeguard duty of 12 % on certain steel imports into the country over the next three years. The DGTR in March 2025 had imposed a safeguard duty of 12 % on steel imports for 200 days, and media reports highlight that Indian finished steel imports declined by 40% y-o-y to 1.67 million tonnes in April-July 2025.
The global steel industry has also been in turmoil from the start of the current calendar year with the Trump administration imposing tariffs of up to 50 % on steel imports into that country, and it had led to the dumping of steel by Chinese and Vietnamese steel manufacturers across global markets including India.
The seasonal demand revival
And with the monsoon season gradually coming to an end over the next 2-3 weeks across most parts of the country, demand from key user industries like housing, automobiles and infrastructure is expected to pick up strongly. The government has not cut the GST on steel. However, user industries like autos have seen a fall in GST rates and any pick-up in demand for two-wheelers and four-wheelers over the next few quarters would help the steel industry too.
By the numbers: How companies are performing
JSW Steel’s standalone revenue from operations at Rs 31,613 crore in the June 2025 quarter, fell nearly 3 % on a y-o-y basis. However, a tight check on its operating costs helped its standalone net profit jump 80.7% y-o-y to Rs 2,178 crore in the June 2025 quarter.
And Tata Steel’s consolidated revenue from operations at Rs 53,178 crore in the June 2025 quarter, a fall of 3 % y-o-y, and its consolidated net profit rose 118% y-o-y to Rs 2,007.36 crore in the quarter.
The investor’s dilemma: Stretched valuations
JSW Steel trades at a P/E of more than 30 times estimated standalone FY26 earnings, and Tata Steel trades at 26 times estimated consolidated FY26 earnings. SAIL trades at more than 18 times estimated consolidated FY26 earnings.
Clearly, steel stocks are quite expensive in the short-term and broadly factor in the growth opportunities over the next few quarters. Only time will tell whether, in hindsight, whether these stocks were cheap, or fully valued at this point in time.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his family have no shareholding in any of the stocks mentioned in the article.
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