With further fall in steel prices and hike in coking coal prices, operating conditions have worsened for steel makers. The demand environment remains muted. Domestic hot-rolled coil prices fell by Rs 700 per tonne week-on-week to Rs 55,200 per tonne, said a September 12 report by Nomura Financial Advisory and Securities (India). Citing Steelmint, He further added that the average price so far in September is 3% lower than the average seen in August.
Besides, margin pressure has increased due to sharp rise in cost of coking coal after a brief period of moderation. However, the good thing is that iron ore prices have remained stable.
Nevertheless, meaningful growth in demand for the metal is significant. The September quarter (Q2FY23) is expected to bear the brunt of seasonality and demand is likely to improve thereafter.
Analysts at Edelweiss Securities said in a report on September 9, “Examination of our channel indicates that dealers are taking a cautiously optimistic view of recovery in demand in the second half of FY23.”
Meanwhile, Indian producers may take advantage of opportunities in export markets in the backdrop of the ongoing energy crisis in Europe, say analysts at Edelweiss Securities.
But with the imposition of export duty on finished products, the export potential of semi-steel has increased. Export duty is a significant drag on steel stocks and positive developments on that front should help investor sentiments. Shares of Tata Steel, JSW Steel and Jindal Steel & Power are down 13-28% from their 52-week highs.
Steelmint noted that the steel prices have seen a fall since the commerce ministry imposed 15% export duty in May-22, but is waiting to ascertain whether the fall in prices is due to weak seasonal demand during the monsoon season. or export. Fee cuts, Nomura’s report said. “Rollback or reduction in export duty will be considered after ascertaining the reasons behind the decline. The duty may be retained till it is established that the fall in prices was on imposition of duty and not due to seasonal monsoon factor.”
catch all business News, market news, today’s fresh news events and breaking news Updates on Live Mint. download mint news app To get daily market updates.