CLSA in its latest note on the metals and mining sector said China is set to reduce its steel capacity by 50 million tonnes in calendar year 2025, with a production cut target of 8.5% for the remainder of the year. This comes after Chinese steel output already dropped by 20 million tonnes over January to July 2025.
Despite lower production, Chinese steel exports have surged to an all-time high, exacerbating the demand–supply imbalance seen over the past 18 months. CLSA observed that earlier measures had yielded limited results. However, it expects the tightening of the market to support better spreads, thereby boosting profitability for Indian steel mills.
Reflecting recent price trends and quarterly results, the brokerage has tweaked FY26–28 EBITDA estimates for metals and mining companies under its coverage by a range of –4% to +8%. Target prices have also been adjusted by –3% to +6%.
Among stocks, CLSA said it relatively prefers Jindal Steel & Power (JSPL) given its strong capacity addition-driven growth outlook. The brokerage also continues to favour aluminium, supported by a tighter demand–supply balance in the global market.
Disclaimer: This article is based on brokerage views as cited. The views expressed are those of the brokerage and do not represent investment advice.
