The Nifty Metal index has jumped 14 percent in the last one month after hot-rolled coil (HRC) prices subsided. After falling for 21 weeks, domestic HRC prices have shown an uptick in key markets of Kolkata and Delhi while remaining stable elsewhere, said Edelweiss in its report.

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In the longs market, as expected, large producers have taken a price hike of Rs 750-1,000/tonne post price increase taken by medium/small producers earlier were absorbed. "Therefore, expect that there is a possibility of these hikes being absorbed as our interaction with traders reveals that the destocking phase is likely over with demand showing slight improvement," the report added.

The brokerage believes the first signs of a concerted improvement in all major steel markets can be seen even though if it’s too early. Furthermore, during the earnings call, all steel producers expressed hope that 1) restocking will help price recovery, 2) benchmark price has likely bottomed out, and 3) domestic recovery will also improve.

Edelweiss maintained a ‘buy’ call on Jindal Steel as it stands out due to niche products (rail, specialty plates) that relatively price inelastic. It maintained a ‘hold’ rating on Tata Steel and ‘reduce’ on SAIL.

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