Metal and Mining share price target

Another asset valuation benchmark bites the dust as the last downcycle equity valuation + deleveraging is breached for JSPL and SAIL. This is after the GoI’s export duty imposition led to 1x forward P/B benchmark being breached for the sector. With so much flux in liquidity and rate changes (sharpest single rate hike in 28 years by FOMC), asset valuations are also recalibrating (in our view).

Aluminium price is being supported by deficits as supply disruptions outpace demand weakness

Imposition of Export Duty Takes the Sheen Away from the Steel Sector

China's steel demand recovery delayed to end-Q2CY22 but full-year growth outlook still achievable

Iron ore price likely to remain elevated through the June quarter as supply issues persist

spreads would sustain at elevated levels. Additionally, it would Indian steel producers to further expand their market share in exports market. Margins to remain elevated: Activity in China is currently impacted due to stringent lockdowns imposed by authorities to curb the spread of Covid-19. However, the activity would revive back strongly in China post reduction in covid-19 cases as Govt is taking all necessary policy measures, especially housing and infrastructure sectors. Revival in demand and under pressure supplies will keep margins on elevated levels in FY23e. Admittedly, the current abnormal level of steel prices at...

Metals and Mining Q4FY22 Preview

The conflict has exacerbated seaborne coal tightness with rail and port logistics disruption in Russia reducing its coal export by 75% in Mar'22

The Russia Ukraine conflict has provided traction to global metal prices. During YTD CY22, a healthy rally has been witnessed in both ferrous and non-ferrous metals. During YTD CY22 (January 1-March 10, 2022), aluminium prices on the LME increased by ~21% to US$3409/tonne. On the ferrous front, during the above mentioned period, Chinese HRC export price increased by 13% YTDCY22 to US$855/tonne, domestic HRC price have increased by 9% YTDCY22 to | 69500/tonne and domestic CRC prices increased 16% YTDCY22 to | 80500/tonne. Going forward, we believe supply fears on the back of current geopolitical scenario...