Steel Surge Derivation - 14.05.2021

Indian steel companies forecast revolutionary changes for long term as the industry rally continues.

The price of key steel making ingredient have now crossed $100 a ton which is the highest ever recorded value as per the historical data . Also global iron ore demand is expected to surge as a significant demand is expected from china.

Artificial scarcity of iron ore is created by infrequent export by Indian government instead if the same utilized for Indian steel companies might create a positive impact of the industry.

However the positive note here is the steel industries turned out to be the savior for oxygen short supply on the covid-19 second wave instead of taking advantage of the situation for profit maximization is appreciated.

Customs duty cut on the steel imports may not impact domestic steel maker. The rationale behind this is the price in china is $900 per ton including the freight and additional charges the price goes to $978 /ton. On the other hand domestic price ranges from INR 68K -70K /ton.

To summarize unless international price dips in the coming months there is no risk of imports impacting domestic players.