Metals: China’s cuts lift pricing power
CLSA said steel prices are expected to firm up, backed by global recovery trends and seasonal strength, adding that Indian producers are likely to benefit from China’s “anti-involution” strategy aimed at curbing excess competition. The brokerage said earlier attempts to fix the supply glut have delivered little, but “tighter markets should lift spreads and profitability for Indian mills.”
China, which makes 60% of the world’s steel, plans to trim output by 50 million tons in 2025 — an 8.5% cut for the rest of the year. Output fell 20 million tons between January and July, even as exports hit record highs. CLSA has adjusted its FY26–28 EBITDA estimates for metals and mining companies by –4% to +8% and target prices by –3% to +6%. It prefers Jindal Steel & Power for growth tied to new capacity while favoring aluminium exposure through Hindalco and Vedanta.
Sunny Agrawal, Head of Fundamental Equity Research at SBI Securities, said the planned 50 million ton steel cut in China should support higher pricing and margins for Indian producers.
“With reduced output from China, global steel players including Indian, are likely to enjoy better pricing power. We expect ferrous steel producers’ EBITDA during FY26E-FY28E to increase by 3% – 9% on the back of margin expansion, assuming all input costs remain stable. Additionally, India has extended the safeguard duty for three more years, to help sustain domestic steel prices,” said Agrawal.
Morgan Stanley has also turned more positive on Indian steel makers, citing demand recovery and Chinese supply reforms. The brokerage upgraded JSW Steel and Tata Steel to “overweight” from “equal weight,” and raised SAIL to “equal weight” from “underweight.”
Aluminium: Hindalco and Vedanta set to benefit
Agrawal said that efforts by China to rein in excess production should help support LME aluminium prices at $2,500–$2,600/t by tightening the global supply-demand balance. “This will eventually benefit aluminium producers like Hindalco and Vedanta by improving aluminium spreads, assuming all input costs remain the same,” he said.CLSA’s estimates and stock preferences also tilt toward aluminium, where Hindalco and Vedanta are expected to gain from tighter supply.
Reliance Industries: Morgan Stanley sees a re-rating cycle
Morgan Stanley retained its “overweight” rating on Reliance Industries and raised the target price to Rs 1,701 from Rs 1,602, implying about 23% upside from current levels. The brokerage said that “Anti-Involution and AI will redefine RIL’s equity story. RIL is the largest beneficiary of China’s anti-involution focus across energy and solar supply chains. RIL’s self-anti-involution in consumer retail and telecom is also bearing fruit.” The brokerage noted that “anti-involution marks a re-rating cycle for Reliance Industries for the first time since Covid.”
The brokerage pointed to Reliance’s fully integrated solar supply chain and noted that supply-side cuts in China’s solar value chain could lift pricing and margins as the cycle normalizes. It also highlighted a “Golden Age” backdrop for refining as legacy capacity rationalizes and said chemicals are bottoming as older plants shut down.
Sunny Agrawal noted that China’s overcapacity cuts in solar and energy supply chains are creating meaningful upside for Reliance’s new energy business. “Less competitive intensity from China augurs well for large players like Reliance. However, the new vertical is likely to contribute closer to 10–12% topline in FY27E. We believe consumer business will continue to be the key growth driver during FY26E and FY27E,” he said.
EVs and renewables: Mixed impact for Indian firms
On EVs, Agrawal said the domestic passenger EV industry has not been affected by Chinese competition. Chinese cars currently imported from China and sold in India are in the higher price bracket due to high import duties imposed by India. “Only BYD is the Chinese OEM currently selling in India and competes in the price bracket of Rs 25 lakh to 50 lakh where Tata Motor’s EVs are not present except for top versions of Tata Harrier EV.”
Agrawal added that anti-involution in EVs “is not plain capacity reduction but based on technology standards starting 2026,” which should benefit Jaguar Land Rover as competition based solely on price cutting recedes.
On renewables, Agrawal said, “Adani Green is predominantly a green power producer and is not likely to benefit from reduced supply pressure from China.”
Second-order beneficiaries
Beyond headline names, investors may want to watch lenders and capital goods firms. “Overall we believe the key beneficiaries are likely to be sectors like metals and mining, renewables, [and] the EV ecosystem. Indirect beneficiary can be the banking/NBFC sector as risk towards funding all the three sectors reduces,” Agrawal said, adding that paper and chemicals could also gain if Chinese producers step back.
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