The Hindu Business Line : Metal stocks turn red hot

Mumbai, Dec. 3 Expectations of a hike in steel prices coupled with good demand for both ferrous and non-ferrous metals from roaring infrastructure sector boosted the metal index to post sharp gains on Monday. The BSE Metal index gained 550 points to 18,281.24.

Hindustan Copper rose 5 per cent to Rs 436, , Hindalco 3.37 per cent to Rs 191, Hindustan Zinc 2.56 per cent to Rs 830, Tata Steel 1.57 per cent to Rs 838, SAIL 1.57 per cent to Rs 262, Jindal Steel and Power 4.87 per cent to Rs 14,166 and JSW Steel gained 4.58 per cent to Rs 1,058.

Steel Authority of India (SAIL) has plans to invest Rs 12,000-15,000 crore over the next five years in modernisation and technology to sustain its current production capacity.

“Out of Rs 53,000 crore proposed revised investment till 2012, we will have to invest Rs 12,000-15,000 crore in areas to maintain, modernise and upgrading the technology to sustain the capacity in our existing steel plants,” SAIL said. JSW Steel has lined up an investment of Rs 7,500 crore in Tamil Nadu to increase capacity and explore mining opportunities.

“The company’s subsidiary SISCOL planned to use iron ore available in Kanchamalai area in Salem and in Tiruvannamalai district (Tamil Nadu) by putting up mining facilities at an investment of Rs 400 crore,” JSW said.

“Despite capacity additions across the globe in the steel sector, the demand has been robust and companies are able to pass on the increase in raw material cost to end consumer which is a big positive for the sector,” said Mr Ashish Poddar, metal analyst, Almondz Global Securities Ltd.

China’s steel production was up 18 per cent up to November, while it is expected to grow 10 per cent the next calendar year due to rising demand from infrastructure companies, Mr Poddar added.

“Among base metals copper and zinc, which had given negative returns, are expected to turn positive with demand from power sector increasing.

“Our outlook for the metal sector is positive,” said Mr Sanjay Jain, metal analyst, Motilal Oswal Securities Ltd.