Indian steel makers continue to struggle, as the global demand stays weak, putting stress on local prices. Chinese real estate, a key market for metals and minerals, is still not showing signs of satisfactory momentum. Read SURFACES REPORTER (SR)’s complete report below:
Week-on-week, average HRC prices in India tumbled by ?900 to ?59,000 per tonne as major steel producers JSW Steel Ltd and AM/NS India cut their early May-23 hot rolled coil sales price month-on-month by ?2,000-2,500. According to a report from Nomura Financial Advisory and Securities (India) dated 8 May, AM/NS India is a collaborative venture between ArcelorMittal and Nippon Steel.
Domestic steel prices are higher than those from countries such as China, Vietnam, and Japan, which suggests that it may be possible to lower them further.
Lower Raw Material Costs Bring Hope for Improved Margins
Raw material costs have experienced a reduction in pressure, which could potentially have a beneficial effect on margins. Nomura experts have noticed an average 4.3% month-on-month surge in HRC spreads during May, despite HRC price falling 1.7% each month. Simultaneously, coking coal prices had also witnessed a hefty 16% monthly dip compared to April's average.
Furthermore, NMDC, the state-owned iron ore producer, reduced their prices of lumps ore and fines by nearly 7% and 2%, respectively, to ?4,200 per tonne and ?4,010 per tonne on 29 April. This follows months of price increases from mid-November when the government removed or lowered export duty on the key input.
Rebound In Global Prices Of Iron Ore
Analysts at Motilal Oswal Financial Services have observed a rebound in global prices of iron ore and coking coal, according to a report published on 8 May. It would be a wise decision for steel stock investors to monitor closely the trajectory of commodity costs.
Since reaching their respective 52-week highs, shares of leading steel companies such as JSW Steel and Tata Steel have dropped by an estimated 5%-13%. The chances of these stocks gaining significant value appear slim currently due to the lower demand levels.
Demand is still not strong as customers in different areas have adopted a policy of 'wait-and-see' or buying only what they need. Export orders were filled up for the month of April, giving rise to concerns that prices could fluctuate in the next few weeks, according to Motilal Oswal analysts.
Source: Live Mint
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