InvestorQ : How do you see the steel price hike impacting steel companies like Tata Steel, SAIL and JSW Steel?
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How do you see the steel price hike impacting steel companies like Tata Steel, SAIL and JSW Steel?

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NISHA Nayak answered.
2 months ago
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There are two good things that is happening in the steel sector. Firstly, they have hiked prices substantially and secondly, they have also guided about more price hikes. In a sector where profits are directly driven by prices, this is great news. The question is whether this news is already in the price or not?

At the outset, it surely looks like good tidings for steel companies. Across the board, as steel product prices have been hiked by up to Rs.2400/tonne and this trend is a lot more pronounced in the case of longs than in the case of flats. However, steel companies have indicated that this may just be the first phase.

According to hints coming from Indian steel companies, the actual price hikes could even go as high as Rs.6000/tonne in some cases and that is great news if it actually happens. Hot rolled coils or HRC prices have been increased by around Rs.1500/tonne while the price of rebars is up by Rs.2400/tonne. In short the bias is more towards long products.

Input costs have gone up but steel companies have an upper hand as there is likely to be a shortage of long products in the market. Even global steel prices have moved up sharply. However, in terms of price, the apprehension is that most of the news may already be in the price and hence further upsides could be limited. You may have to play steel cautiously.

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