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It has been a mixed bag for stock prices of steel companies in the last one month. While Tata Steel and SAIL have decreased by 7.5 per cent 11 per cent, JSW and Jindal Steel & Power have risen 15 per cent and six per cent respectively.
If the market words are to be believed, stocks of steel manufacturers are in for bad times in the coming months.
Steel companies are expected to cut prices in the range of Rs 1,000 – Rs 1,500 per tonne in the near future.
The net sales realisation of steel companies is anywhere between Rs 35,000 and Rs 35,500 per tonne for hot rolled coils. For cold rolled coils, the realisation is between Rs 40,000 and Rs 41,000 per tonne.
Experts see this cut as a tactic to improve offtake of inventory that has been piling up.
Steel companies also want to achieve price parity with imported steel after implementing the cut, said the head of research at an Indian brokerage.
There is fear that lack of capital expenditure announcements by India Inc and delay in project clearances by the centre could hit demand even after the cut. Hence steel manufacturers are utilising only one third to two thirds of their installed capacity.
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