Metals & Mining Sector Report : Steel finds a floor; aluminium holds its gains
HRC prices, after touching a five -year low in early December, appear to be approaching a near -term cyclical bottom. Seasonal demand recovery, coupled with the recently announced safeguard duty, suggests that a near -term price trough is likely to form in Q3FY26. That said, excess domestic supply may cap pricing power for steel producers, limiting the extent of any major earnings upgrades. In contrast, alumin ium fundamentals remain stronger, supported by the limited scope for incremental production in China a nd firm copper prices.
China-led decline weighs on global steel production: As per World Steel Association, global crude steel production declined ~5% YoY to ~140.1mn tonne s, primarily led by a sharp ~11% YoY contraction in China, while production in the rest of the world increased ~3% YoY. MoM, global output fell ~3%, with both China and ROW recording declines of ~3% and ~2%, respectively.
India steel exports surge amid CBAM-led pre-buying: India’s crude steel production rose ~11% YoY to ~13.7mn tonne s in November, with provisional December data indicating a further ~5% YoY and ~3% MoM increase. On the trade front, imports declined sharply by ~45% YoY to ~0.46mn tonne s, while exports increased ~38% YoY to ~0.62mn tonne s. For April -November 2025, India’s steel exports (including stainless steel) grew ~31% YoY to 5.77mn tonne s, driven by pre -emptive restocking by EU buyers ahead of the phased i mplementation of the Carbon Border Adjustment Mechanism (CBAM). Finished flat exports to the EU surged ~45% YoY to 2.46mn tonne s during the period. Notably, India fully utilized its HRC safeguard quota for Q4CY25 by end - November, well ahead of the 31 December 2025 expiry.
Domestic steel prices recover, while global trends mixed: After declining ~4% MoM for two months, China’s HRC export prices rebounded ~1% MoM in December. Global HRC price trends remained mixed, with prices in the US rising ~6% MoM and in North Europe up ~3% MoM, while Japan witnessed a ~2% MoM decline. In India, primary rebar prices recovered ~3% MoM in December after remaining flat for two months, while domestic HRC prices increased ~2% MoM following mill announcements of HRC and CRC pri ce hikes in the ra nge of ~INR 750 -1,000/tonne in late December. The recovery was further supported by firm domestic iron ore prices and higher imported coking coal costs due to INR depreciation.
Steel mills have also announced another INR 1,000 -2,000/tonne price hikes in early January. This is expected to help support steelmakers’ margins amid rising coking coal prices and steel prices hovering at multi -year lows in early December . On the raw material front, iron ore prices rose ~1% MoM in China and ~2% MoM in Australia in December, after a decline in the previous month.
Non-ferrous metals extend their rally in December Major non -ferrous metal prices, except LME lead, extended their upward momentum for another month. LME copper recorded the sharpest rise, up ~9% MoM, driven by expectations of fresh US tariffs on refined metals and supply disruptions across key mining regi ons such as Chile, Peru and Indonesia. LME aluminium prices increased ~2% MoM, while LME nickel rose ~1% MoM. In contrast, LME lead reversed its earlier gains and declined ~3% MoM, while LME zinc remained broadly flat. January -to-date, LME aluminium prices have moved up further by ~7% MoM, with average prices reaching ~USD 3,076/tonne, supported by declining inventory. Rising production costs in China, driven by energy curtailments for the ongoing winter and environmental compliance challenges across upstream and downstream operations, have continued to support prices. In the near term, aluminium prices are expected to remain firm, aided by lower inventories and production disruptions in China. Meanwhile, alumina prices in China continued their downtrend, declining ~2% MoM. The correction reflects expectations of a tightening aluminium supply environment in the coming months, as China operates close to its annual output cap, which could reduce in cremental demand for alumina going forward. In the non -ferrous space , outperformance in January has come from LME Nickel , up 17% MoM on expectations of supply cut in Indonesia.
Coal prices witness divergent trends After a sustained uptrend from July to November 2025, coal prices in China showed signs of softening in December, while prices in other markets continued to move higher. Coking coal prices in China declined ~4% MoM in December, whereas prices in Australia rose ~8% MoM. Similarly, thermal coal prices in China fell ~7% MoM during the month, in contrast to a ~2% MoM rise in South Africa. January -to-date trends remain mixed, with coking coal prices down ~3% MoM in China but up ~4% MoM in Australia. Thermal coal prices in China have declined further by ~8% MoM, while South African prices have increas
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