JPM-JPM Mining Daily Iron Ore -百分之2.8,Nickel 百分之1.1...-20260105

Sharp stock price rally into year-end; a quick recap and our thoughts

Indian metals and mining stocks have rallied 10-20% in the last one month (vs. a flattishNifty), aided by expectations of improved earnings due to higher commodity prices. In Steel,domestic HRC spot prices have already surged 8% (~Rs3.5K/t) vs. the 3Q average followingthe much awaited approval of safeguard duty on 31 December. LME Al prices have alsoinched up closer to our commodity team’s peak forecast of $3,000/t in 1HCY26 (up 6%/14%vs. the 3Q/2Q avg). We believe the stock prices of aluminum producers HNDL/VEDL arealready factoring in $3,000/t LME after the recent rally; hence, we don’t see further upside.The Coal India stock price rally doesn’t appear to be backed by fundamentals as impliedofftake growth in 4Q to meet our conservative FY26 estimate is ~12% (vs. YTD -2%),inventory at thermal power plants is still 18 days (15% higher than last year) and internationalprices remain soft. Our preferred picks remain TATA and JSTL. We expect TATA to see are-rating led by improving India growth prospects, safeguard duty implementation andturnaround in European operations. We believe shares of JSW Steel may also see a catch-upas the stock has been a laggard in the recent rally and should clearly benefit from rising HRC prices. Our pecking order is TATA>JSTL>COAL>SAIL>HNDL>VEDL>NMDC.