Metal and Mining share price target

Domestic HRC price (in the week ended June 7, ’23) declined by an average of Rs700/te WoW in traders’ market following the cuts taken by major steel companies amidst weak demand. Spot spread also contracted 3% WoW following a slight uptick in coking coal price.

Q4FY23 saw profitability improving across companies mainly led by higher realisation and lower cost. Key highlights: 1) Realisation for ferrous companies rose by Rs1,500- 2,000/te on average; 2) coking coal cost was down by US$8-10/te for all ferrous companies except SAIL.

Domestic HRC price (in the week ended 31st May declined by an average of Rs500/te WoW in the traders’ market owing to weak domestic demand and competitive imports. Spot spreads contracted 1.5% WoW tracking the decline in HRC price as coking coal price remained stable at US$198/te.

Spot HRC price in traders’ market declined by Rs500/te on average due to heightened pressure of imports and sustained weakness in Chinese export price. Spot spreads also contracted Rs600/te on average as raw material prices remain unchanged.

Spot HRC spread for sheet steel players has fallen slightly in the week ended 10th May’23 compared to last week due to an uptick in coking coal prices and HRC price remaining range-bound. In export market, FOB India prices corrected sharply by US$48/te, tracking the decline in Chinese export price.

China’s trade data for Apr23’ was subdued as domestic demand uptick has been less than expected. Key highlights: 1) Copper imports in refined form fell for the fifth successive month; however, copper concentrate imports rose to the highest- ever level for April; 2) steel exports rose 59% YoY at 7.9mnte - highest since Apr21’.

Major steel companies have pruned their HRC list price by Rs2,000-3,000/te in order to restore the parity wrt imports. Traders were anticipating a price cut in May23’ over the last few weeks, resulting in domestic HRC price progressively reducing by Rs1,000/te in the month of Apr23’.

ArcelorMittal’s (MT) Q1CY23 performance was ahead of the street’s expectations on all parameters. Key points: 1) end of destocking in key markets resulted in higher shipments; 2) EBITDA/te rebounded 26% QoQ from a cyclical low of US$100; 3) energy costs have reduced considerably from H2CY22 highs; 4) AM/NS India performance improved QoQ led by higher volumes and steel prices.

Constellium’s (CSTM) Q1CY23 performance missed consensus estimates mainly due to higher costs and subdued shipments at packaging segment. Key points: 1) Packaging shipments were impacted by the ongoing destocking in North America and Europe.