Metal and Mining share price target

HRC prices in the traders’ market rose slightly by INR 50/te in the week ended 23rd Aug’23 on expectations of demand pick-up and low channel inventory. Spot spread however edged slightly lower as coking coal prices also rose by USD 3/te WoW (12% over last one month).

After a hiatus of three quarters, Q1FY24 was steady for the metal sector companies under our coverage. Key points: 1) earnings of most companies surpassed consensus estimates; 2) working capital accretion primarily led to higher debt; 3) target prices for most stocks were raised by the street – though EBITDA estimate revision was a mixed bag; and 4) stock reaction post results was most positive for JSPL and Tata Steel.

Top Sector Ideas - Metals and Mining

Top Sector Ideas - Infra Road

We hosted Dr. Edwin Basson, DG- World Steel Association for a webinar to understand the dynamics of steel industry and India’s evolving position in the steel world. Key points: 1) Steel consumption/production in China has peaked out; 2) steel consumption in India is expected to grow, but is unlikely to replicate China’s boom from 2004-16.

HRC prices in the traders’ market rose slightly in the week ended 3rd Aug’23 on expectations of price hike of INR500-750/te by the major steel players. Spot spread however edged slightly lower as coking coal price also rose by USD 4/te WoW. In longs, secondary rebar prices also saw an uptick.

HRC prices in the traders’ market rose slightly in the week ended 26th Jul’23 on limited channel inventory and increase in China HRC export prices. Spot spread however edged slightly lower as coking coal price also rose by USD 5/te. In longs, however, prices continued to decline in the seasonally weak monsoon period.

ArcelorMittal’s (MT) Q2CY23 EBITDA of USD 2.6bn (down 50% YoY, up 43% QoQ) surpassed street estimates by 9%. Key points: 1) Positive price-cost spread offset the impact of lower volumes; 2) steel spreads, aided by lower inventories, remained higher than the historical average.