Key Numbers
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Overall EBITDA margin across Systematix’s metals and mining coverage rose to 21.6% in Q1 FY27, from 19.5% in Q4 FY26.
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Non-ferrous companies recorded an EBITDA margin of 23.2% in Q1 FY27, compared with 21.1% in Q4 FY26.
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Non-ferrous EBITDA margin was 17.8% in Q1 FY26, showing a significant improvement over the year.
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Indian steel producers continue to face pressure from higher coking coal costs.
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India meets around 95% of its coking coal requirement through imports.
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Every $10/t increase in coking coal prices can add around $7–9/t to steelmaking costs.
India's Metals Sector Gets a Better Outlook
India's metals and mining sector is showing signs of improvement after a mixed start to the financial year. The latest sector assessment from Systematix points to non-ferrous companies as the main drivers of earnings growth, while selected steel producers could benefit from higher volumes and new capacity coming on stream. At the same time, raw material prices remain a concern, particularly for companies that depend heavily on imported inputs.
The improvement is also visible in margins. Across the companies covered by Systematix, the overall EBITDA margin increased to 21.6% in the first quarter of FY27 from 19.5% in the previous quarter and 18.6% a year earlier. The non-ferrous segment performed even better, with margins reaching 23.2% compared with 21.1% in the previous quarter and 17.8% a year earlier.
This does not mean that the entire metals sector is moving in the same direction. Steel, mining and steel-pipe companies are facing a different set of challenges, while companies producing aluminium, copper and other non-ferrous metals are getting support from better realisations and cost conditions. The difference between the two segments could become more visible in the coming quarters.
Why Non-Ferrous Metals Are Doing Better
One of the biggest reasons behind the stronger performance of non-ferrous companies is the improvement in commodity prices. Copper has remained a strong contributor to earnings, while better alumina realisations have also supported aluminium producers. At the same time, lower costs in some areas have allowed producers to retain more of the benefit from higher metal prices.
There is also a longer-term demand story supporting non-ferrous metals in India. Copper and aluminium are closely linked to electricity networks, renewable energy, electric vehicles, construction and industrial activity. As India continues to invest in infrastructure and expand its manufacturing base, demand for these metals is likely to remain an important part of the overall metals story.
Copper in particular has a wide range of applications across the power and electrical sectors. Expansion of transmission networks, renewable energy projects and charging infrastructure all require significant quantities of copper. This gives copper demand a relatively broad base and reduces dependence on any single industry.
Steel Producers Face a Different Situation
The outlook for Indian steel producers is also improving, but the recovery is not as straightforward. Steel companies are expected to benefit from capacity expansion, stronger volumes and better operating leverage as domestic demand remains healthy. However, higher coking coal prices are putting pressure on margins and could limit the benefit of stronger steel realisations.
The coking coal issue is particularly important for India because the country depends heavily on imports. India meets around 95% of its coking coal requirement through imports, with Australia supplying at least half of those imports. This leaves Indian steelmakers exposed to international price movements, freight costs and disruptions in major exporting countries.
The pressure has already become visible in the cost structure of steel production. Premium hard coking coal prices averaged around $236 per tonne FOB Australia during the first seven months of 2026, up 25% from last year. Reuters reported that every $10 per tonne increase in coking coal prices can add around $7–9 per tonne to the cost of making steel.
Strong Steel Demand Is Providing Some Support
Despite the cost pressure, domestic steel demand remains one of the stronger parts of India's industrial story. Infrastructure development, construction activity and economic growth are providing a base for steel consumption. This is important because it gives domestic producers an opportunity to increase volumes even when international steel markets remain uncertain.
Recent corporate earnings also point towards relatively healthy demand conditions. Reuters reported that metals were among the sectors benefiting from improved pricing during the June quarter, while India's Nifty 50 companies recorded average profit growth of 18%, the highest in ten quarters. The broader earnings picture therefore remains supportive, although higher raw material and freight costs continue to create margin pressure.
For steelmakers, the next phase will depend on how much of the increase in raw material costs can be passed on to customers. If steel prices rise enough to cover higher coking coal costs, margins can remain stable. If prices remain under pressure while input costs stay elevated, producers could face a more difficult second half.
Capacity Expansion Could Change the Picture
Capacity expansion is another important part of India's metals story. Several large producers are investing in additional steelmaking capacity, and the benefits will become more visible as new facilities begin operating. Higher volumes can improve profitability because fixed costs are spread over a larger production base.
However, the timing of these projects will matter. Delays in commissioning new capacity can push back the expected benefits, while a faster-than-expected increase in production could put additional pressure on domestic prices if demand does not grow at the same pace. Execution will therefore be just as important as the size of the announced expansion.
For companies with strong balance sheets and established infrastructure, capacity additions could provide a meaningful advantage. Those producers are better placed to benefit from India's long-term steel consumption growth, particularly if domestic infrastructure spending remains strong through the rest of FY27.
Mining Companies Offer a Mixed Picture
The mining segment is not showing the same broad improvement as non-ferrous metals. NMDC has a relatively positive outlook, with additional volumes expected from Deposit 4 and Deposit 13, along with mine debottlenecking and improvements in logistics. These factors could help increase output and improve the company's ability to serve the growing domestic steel industry.
Coal India presents a different picture. Power demand remains strong, but weaker volumes and pricing pressure are creating challenges for the company. This shows that strong end-user demand does not always translate directly into better earnings when production, logistics and realisations are moving in the opposite direction.
Manganese is another segment that needs to be watched. MOIL's recovery depends on an improvement in production as well as manganese ore realisations. Since manganese demand is closely connected with steel production, any improvement in global steel activity could provide support, but the segment remains more dependent on the broader steel cycle than the major non-ferrous metals.
The Role of Global Metal Prices
India's metals sector cannot be separated from global commodity markets. Domestic producers may have strong demand at home, but the prices of copper, aluminium, zinc, iron ore and coking coal are influenced by international supply and demand. Changes in China, global manufacturing activity and geopolitical developments can therefore quickly affect Indian producers.
This is particularly important for non-ferrous producers. Strong copper and aluminium prices can improve earnings, but a sharp fall in global metal prices could reduce realisations even if domestic consumption remains healthy. The current improvement in the sector should therefore be seen as a combination of domestic demand and favourable commodity conditions rather than a purely India-specific trend.
What Could Drive the Sector in the Second Half of FY27?
The second half of the financial year could be important for Indian metals producers. Seasonal improvement in construction activity after the monsoon can support steel consumption, while capacity additions could provide additional volumes. For non-ferrous companies, continued strength in copper and aluminium prices would provide another layer of support.
At the same time, raw material costs will remain a key variable. Coking coal prices are already elevated, and Indian steelmakers have limited room to absorb further increases if finished steel prices do not move up. Freight and insurance costs can add another layer of pressure, particularly when global trade routes are disrupted.
This makes cost control increasingly important. Companies with captive raw materials, efficient operations, strong logistics and higher capacity utilisation could be in a better position than producers that rely heavily on spot purchases. In a volatile commodity market, the ability to control costs can make a significant difference to margins.
Non-Ferrous Metals Could Lead the Recovery
The current numbers suggest that non-ferrous metals are in a stronger position than several other parts of India's metals and mining sector. Higher commodity prices, better alumina realisations and stronger copper earnings have already helped improve margins. If domestic demand remains healthy, these companies could continue to provide the clearest earnings growth within the broader sector.
Steel producers are not far behind, but their path is more dependent on the balance between steel prices and raw material costs. Strong domestic demand and capacity expansion are positives, but high coking coal prices could prevent margins from improving as quickly as volumes. This makes the steel story more dependent on pricing discipline and cost management.
The mining sector remains more selective. NMDC has identifiable volume drivers, while Coal India and MOIL face their own challenges. Rather than expecting a broad-based recovery across every metals and mining company, the current environment appears to favour producers with strong operating positions and clear volume or cost advantages.
Outlook
India's metals sector appears to be entering a better phase, but the recovery is likely to remain uneven. Non-ferrous companies currently have the strongest earnings momentum, supported by better commodity prices, improved realisations and favourable cost conditions. Steel producers have solid domestic demand behind them, but high coking coal costs remain a major concern.
The next few months will show whether these positive trends can continue. Strong infrastructure activity, higher capacity utilisation and stable global metal prices would provide a favourable environment for the sector. On the other hand, a sharp fall in commodity prices, higher raw material costs or weaker global demand could quickly put pressure on margins.
Conclusion
The Indian metals sector is showing a more positive picture than it did earlier in the cycle, but it would be wrong to treat all metals and mining companies in the same way. Non-ferrous producers are currently leading the earnings recovery, while steel companies are balancing stronger domestic demand against higher raw material costs. Mining companies, meanwhile, continue to have company-specific factors that will determine their performance.
For the broader industry, the biggest opportunity remains India's growing demand for metals. Infrastructure, manufacturing, power networks and urban development will continue to require large volumes of steel, copper, aluminium and other metals. The companies best positioned to control costs, increase volumes and manage global commodity volatility are likely to benefit most from the next phase of India's metals cycle.
Disclaimer: This article is for information and market discussion purposes only. The information has been compiled from publicly available industry and market sources and should not be considered investment or trading advice. Market conditions can change rapidly, and readers should conduct their own analysis before making any commercial decisions.