Robust Sales, Price Hikes Driving Steel Companies

The recent price hikes by steel manufacturers have also come on the back of the firm demand. Thus, with rising volumes and improving realizations, Indian manufacturers are set to report improved earnings. Steel stocks have bee

BY Realty Plus
Published - Tuesday, 13 Apr, 2021

Robust Sales, Price Hikes Driving Steel Companies

The recent price hikes by steel manufacturers have also come on the back of the firm demand. Thus, with rising volumes and improving realizations, Indian manufacturers are set to report improved earnings. Steel stocks have been in demand in the wake of domestic firms reporting strong sales volume growth during the fourth quarter, indicating continuing steel demand momentum. The recent price hikes by steel manufacturers have also come on the back of the firm demand. Thus, with rising volumes and improving realizations, Indian manufacturers are set to report improved earnings. Of course, one needs to watch out for the impact of a fresh wave of the covid-19 pandemic. Capacity expansions are expected to further aid volume growth in FY22. JSW Steel is set to see capacity expansion of 5 million tonnes per annum (mtpa) at Dolvi in Maharashtra coming on stream and SAIL is to achieve the much-awaited 20 mtpa capacities in FY22, say analysts. Meanwhile, higher realizations in the export market are also aiding overall realizations. During the third quarter, hot rolled coil prices had gained 19% sequentially on average to ?55,250 per tonne. Steel companies are expected to see improvement in blended realization by ?5,500-8,200 per tonne sequentially because of improved domestic prices and product mix, according to analysts at Motilal Oswal Financial Services Ltd. Steel companies could see revenues grow 19-25 % sequentially and 31-47% y-o-y, helped by the higher realization and volume growth, analysts said. The recent price hike of up to ?5,000 a tonne is expected to drive improvement in profitability. However, coking coal prices rose by 21% sequentially to $143 per tonne on a landed cost basis.