Better Demand Facilitates Steel Companies Recovery
The steel sector has seen a sharp recovery on the back of improvement in domestic steel demand, an increase in the hot-rolled coil (HRC) export prices, and benign input cost. This has led the Nifty Metal index to surge around 35 percent in 3 months while the index gained over 48 percent since the month of April. In the last three months, shares of Tata Steel rallied over 49 percent, JSW Steel surged over 45 percent while Jindal Steel & Power jumped 132 percent. India’s finished steel production improved sequentially to 6.8 million tons in the month of July as against 6.1 million tons in June. Though it declined by 44 percent year-on-year YTD FY21 to 19.7 million tons. The private sector steel producers have seen a market share gain YTD FY21 as the PSUs’ total steel production declined to 14 percent from 16 percent during the same period. The share of secondary producers in total finished steel production has declined to 35 percent from 42 percent. Steel companies such as Tata Steel, JSW Steel, SAIL and Jindal Steel & Power Ltd (JSPL) are operating at normalized levels. Meanwhile, India continued to be a net exporter of steel with exports of 4.6 million ton over April-July. India’s HRC export prices continue to witness a steep increase in tandem with strong China HRC price movement - $485/ton currently against $415/ton average in Q1.
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