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| Edited By: Shubhashish |Source: DNA |Updated: Mar 17, 2018, 02:25 AM IST
Metal companies are, well, roaring.
They have China tothank first up, and then domestic consumption.
On Tuesday, Tata Steel said its production of saleable steel, hot metal and crude steel was the best ever in December.
Saleable steel production alone rose 77.4% to 592,487 tonne.
To top it, sales are up 72.8% year on year to 636,000 crore in the month for India’s largest steel maker.
Rival JSW Steel said its production was up 88% in the third quarter to 14.69 lakh tonne of crude steel.
The company said it notched up its highest-ever quarterly production for rolled flat and rolled long products with the former clocking growth of 51% and latter close to 200%.
And gigantic Chinese appetite for iron ore means Indian exports rose 24.5% in November.
Steel re-rollers, too, skimmed the trend.
On Tuesday, Uttam Galva Steels and Bhushan Steel raised prices of their products, following an increase in the prices of hot-rolled coils, which is a raw material for them.
Uttam Galva upped prices of its entire range of products — cold-rolled sheets to galvanised sheets — by Rs 3,000 per tonne, while Bhushan Steel raised prices by Rs 2,000.
Hot-rolled coil prices have risen by up to Rs 2,000 per tonne in the last two weeks, riding on a rise in international prices due to Chinese demand.
The same Chinese demand meant India exported 10.6 million tonne of iron ore in November, nearly 25% more than in the same month of 2008.
Glenn Kalavampara, secretary, Goa Mineral Ore Exporters Association (GMOEA), said that the mining sector, especially in Goa is looking forward for very fruitful iron ore movements as the industry is just coming out of recession.
He said that iron ore exports from Goa increased by 15% in the period of April to November this year as against the same period last year.
Naturally, metal stocks were afire.
JSW Steel closed up by 11% at Rs 1,134, Tata Steel rose 2.36% to Rs 649, Jindal Steel and Power gained over 2% or Rs 16 to Rs 728, and SAIL rose 2.54% to Rs 254.40.
Ravindra Deshpande, metals analyst with Elara Securities (India) Pvt Ltd sees the good lasting for a while due to a number of factors. “First, China is reporting higher capacity utilisations because of which threat of Chinese imports has reduced marginally. Secondly, India has been reporting 8% year-on-year demand growth and given the fact that European imports can happen at a price above $700 per tonne, the Indian steel prices will remain firm,” Deshpande said.
Prasad Baji, senior vice-president, Edelweiss Securities Ltd, said, the future of the steel sector looks bright with the upcycle having only just commenced from the middle of last year.
“The whole story is related to demand and the apparent oversupply of steel globally is now coming down because of the growing demand. India continues to be in a good shape and growth in China is a single most important factor for the demand to remain strong.” Baji said. “There is much steam left here.”
Amit Kasat and Rahul Menon, analysts with brokerage Anand Rathi, point to rising capacities too.
“Tata Steel is carrying out a 2.9 million tonne capacity expansion at its Jamshedpur plant. This would increase its domestic crude steel capacity to 9.7 million tonne by 2011, implying an effective doubling since the economic downturn (from 4.8 million tonne in 2008),” Kasat and Menon said in a note.
Moreover, the duo expect Corus to turn EBITDA positive in FY11 following the cost-cutting steps undertaken. “Valuations already seem to be building in this, and further upside would be contingent on increased raw-material security at Corus,” they said.
