Steel producers are set to see a sequential fall in profits in the December quarter weighed down by the continued weakness in prices of the alloy.

The September quarter is typically the weakest for steel producers because of the impact of monsoon rains on both prices and demand, but steel prices have corrected further from these levels. Average prices of flat-rolled products fell 4-5% in October-December from a quarter ago, while those of long products were 1-2% lower.

Analysts estimate the blended realisations for steel companies to fall by Rs 1,500-3, 500 per tonne as compared to the September quarter. This, along with an increase in the cost of coking coal, is expected to weigh on the profitability of companies.

As a result, earnings before interest, tax, depreciation and amortization made by companies on each tonne of steel sold will fall by Rs 1,000-2,400 per tonne. "We reckon Q3FY26 Ebitda for all steel companies shall fall 10-21% QoQ due to lower steel prices," Nuvama Institutional Equities said in a pre-earnings note.

Net profit for the December quarter, meanwhile, is seen 10-40% lower sequentially, with Steel Authority likely to take the sharpest hit.

Source: The Economic Times 

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