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Steel stocks moved up and balked Dalal Street's downward trend on Monday. However, two listed iron ore miner-exporters finished marginally down.
According to market insiders, expectations over higher demand and price realisation in the near term drove up the steel stocks.
Mr Bhavesh Chauhan, metal and mining analyst at Angel Broking, felt that the reconstruction activity in Japan would throw up significant opportunity for the local diversified steel makers.
Five major Japanese steel manufacturers have closed their facilities on the country's calamity-devastated eastern coast. Japan, one of the top global exporters of high-end steel products, particularly for auto and auto parts, could be out of action for “some time” until the production and logistical bottlenecks were overcome. The anticipated production loss could be around 30 million tonnes. “This is significant as it exports 40 million tonnes of steel items annually,” Mr Chauhan said.
Change in scenario
The reconstruction demand for construction grade steel is expected to start from April onwards. Commodity analysts said that Japanese tsunami might change the steel demand scenario in Asia in the short-to-medium term.
Steel traders said, the 1995 earthquake in Japan had caused surge in demand and prices in Asia; the reconstruction demand had then benefited only the Chinese and Korean steel makers.
This time around, Indian steel makers would have the opportunity to grab some share of the pie and fetch better price as the top local manufacturers, in the meanwhile, had expanded their production base (some across geographies), adopted better technologies and sharpened their international competitiveness, steel sector observers pointed out.
According to Mr Rajesh Agarwal, head of Research at Eastern Financiers, the equity market players were generally upbeat on Monday for the sector stocks and indulged in pricing in their potential forward earnings growth. “The specifics are not clear yet; the bets are more on assumptions. That is why gains are uneven.”
Among the obvious gainers on Monday were SAIL and Tata Steel. The minor sector players posted remarkable gains. Tata Sponge shot up 12 per cent, Tinplate gained 9.5 per cent and Tata Metaliks jumped 16.4 per cent.
Sesa Goa and NMDC finished down by 0.27 per cent and 0.25 per cent respectively on the BSE on higher volumes.
jayanta_mallick@thehindu.co.in
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