Metal and Mining share price target

Alcoa’s Q2CY23 performance was in line with consensus estimates. Key points: 1) EBITDA was impacted by lower realisation, higher production cost and lower volumes; and 2) working capital unlocking resulted in favourable impact of USD 32mn.

HRC prices in the traders’ market rose slightly in the week ended 19th Jul’23 on optimism around stimulus measures and possible production curtailment in H2CY23 in China. Spot spread also remained stable at INR 31,800/te as slight uptick in coking coal prices was offset by higher HRC prices.

Domestic HRC prices rose by Rs150/te on an average in the week ended 12th Jul’23, the first rise in past 15 weeks on the back of reduced import pressures and roll-over of prices by major steel producers.

China’s trade data for Jun’23 was subdued as demand uptick in its home market has been less than expected. Key highlights: 1) copper imports in refined form fell YoY for the seventh successive month and copper concentrate imports too slipped MoM; 2) steel exports fell on YoY basis for the first time since Apr’22.

Metals - Q1FY24 Earnings Preview

Domestic HRC prices (in the week ended 5th Jul’23) declined slightly in traders’ market. Spot spread, however, rose 0.7% WoW tracking the decline in coking coal prices. India HRC export (FOB) prices were stable at US$570/te.

Q1FY24E is likely to be one of the atypical quarters with prior period inventory, product mix and contract prices resulting in differentiated performance of the companies under our coverage.

Domestic HRC prices (in the week ended 28th Jun’23) declined by an average of Rs200/te WoW in the traders’ market owing to limited avenues for export and subdued domestic demand. Spot spread also contracted 1.4% WoW tracking the steel price erosion and slight increase in coking coal prices.

The steel industry has been under pressure in recent months, thanks to a slowdown in the global economy, rising interest rates, and geopolitical tensions. Notably, China, the largest steel producer (accounting for 54% of global production), is also facing a slowdown.

Domestic HRC prices (in the week ended 14th Jun’23) declined by an average of Rs680/te WoW in the traders’ market owing to the continuation of adverse import parity prices and subdued domestic demand. Spot spread also contracted 1.6% WoW tracking the steel price erosion. India HRC export (FOB) prices too came off slightly (by US$4/te WoW).