Steel scrips, northward-bound for quite some time now, firmed up further on Monday on expectations of strong Q3 results backed by higher price realisations.
Steel major Tisco edged up 1.1% to Rs 155.25 scaling a new 52-week high. Public sector steel major Sail climbed 1.99% to Rs 10.25. Bhushan Steel (up 6.8% to Rs 35), Jindal Vijyanagar Steel (up 5.5% to Rs 5.70), Essar Steel (up 3.3% to Rs 9.15) and Jindal Iron and Steel (Jisco) (up 2.8% to Rs 67.15), were among the others that impressed.
A further hike in steel prices is anticipated by the market. Besides, there's optimism that Q3 results of steel companies will turn out solid.
Tisco announces Q3 results on 23 January 2003 and Sail declares the same on 28 January 2003.
As per reports, steel prices may go up further by Rs 500 per tonne from February 2003 due to low inventory levels. Reports suggest that the current low inventory positions are prompting steel makers to hike prices. This low inventory situation has been precipitated by rising exports as a result of increasing international steel prices (by almost 20% within a month). Flat steel product prices are also firming up in both, the domestic as well as the international market.
At the start of January 2003, steel makers had already hiked steel prices by an average of Rs 700 per tonne. According to reports, in the current fiscal (since April 2002), steel makers have already raised steel prices by Rs 5,000 per tonne.
Meanwhile, it has been reported that developing countries will continue to be exempted from protective duties on steel imports by the US. A group of US steel companies have urged the US government to include India and other developing countries in the list of countries covered by the hefty import duties. The US last year imposed 8-32% duties on steel imports to protect its domestic steel industry.
For the quarter ended 30 September 2002, Tisco posted an impressive 642.6% rise in net profit to Rs 203.18 crore (Rs 2.03 billion) as against Rs 27.36 crore in the corresponding period of the previous year. Net sales rose by 14.2% to Rs 2,207.03 crore (Rs 22.07 billion), from Rs 1,932.93 crore (Rs 19.32 billion) in SQ 2001. Besides the hike in product prices, an enriched product mix with higher share of value added products boosted Tisco's Q2 profits.