Long steel prices in India, which have risen sharply over the past month and a half, still have room to climb further, according to Amit Murarka of Axis Capital. He points to two key drivers behind the continued strength: the return of post-monsoon demand, which typically lifts construction activity and consumption of long steel products such as rebar, and rising coking coal costs, a key raw material input for steelmaking.

To play the rally in long steel, Murarka said he favors Jindal Steel and Power over Steel Authority of India (SAIL). Both companies are major producers of long steel products in India. Separately, he named JSW Steel as the sector's top structural pick.

Long steel products, which include rebars and structural components, are closely tied to construction and infrastructure demand, and their prices tend to strengthen as building activity picks up after the monsoon season. This segment of the market is distinct from flat steel products, such as hot-rolled coil, which serve automakers and appliance manufacturers, and India — the world's second-largest steel producer — has seen long product prices move largely in line with the pace of government-led infrastructure and construction spending. Coking coal, a primary input in steel production through the blast furnace route, is a significant cost component for integrated steelmakers, and higher coking coal prices can support steel price increases as producers pass on input costs. India imports a large share of its coking coal needs, making domestic steel prices sensitive to overseas coal price movements.

The comments come against the backdrop of a broader rebound in steel prices and metal stocks in August, as market participants track the recovery in steel prices alongside moves in companies such as Tata Steel, JSW Steel, SAIL, and Welspun Corp.

(Source: CNBC-TV18)