India's steel industry is expected to see a volume-led recovery in the second half of FY27, supported by easing input costs, reduced maintenance disruptions and resilient domestic demand, according to a brokerage report. The report noted that producers stand to benefit from strong domestic fundamentals and ongoing investment in capacity and downstream capabilities. This outlook comes amid a seasonally softer second quarter which management commentary described as temporary.

The brokerage projected industry growth of up to nine per cent in FY27 and indicated that capacity utilisation remains robust across major producers. It said expansion projects, debottlenecking initiatives and downstream investments are progressing as planned, underpinning medium-term supply growth. Management commentary across the sector was reported as constructive despite expectations of a softer Q2.

The report flagged import trends from China, Japan and Russia as key monitorables, while noting that a 12 per cent safeguard duty has provided some protection to domestic players. Analysts cautioned that domestic steel realisations could soften marginally in Q2FY27, even as lower coking coal costs from August and the normalisation of maintenance shutdowns may support margins. Continued cost optimisation and disciplined capital allocation were highlighted as important for sustaining profitability.

The brokerage also expressed a constructive view on non-ferrous metals, citing a favourable outlook for aluminium, zinc and silver prices driven by supply constraints and supportive demand. It pointed to potential supply-side disruptions, including the closure of the Mozal smelter and geopolitical tensions, which could keep the global aluminium market in deficit for the remainder of FY27. Supportive metal prices and structural cost advantages were identified as key earnings drivers over the medium term. It added that supportive policy measures, execution discipline at company level and sustained domestic infrastructure demand will determine the pace of recovery and investor returns over the medium term.