Monday, December 21, 2009

>Steel metallics prices on uptick. (MOTILAL OSWAL)

Steel prices across the world have largely remained unchanged. However, the steel mills in USA, Japan and China are trying to raise prices for deliveries in Jan 2010 to cover higher input costs.

Scrap, sponge iron and coking coal prices have been on uptrend, while iron ore prices have not weakened much.

Indian mills have kept the prices of flat products unchanged in last two weeks. The pressure has eased now because of rising costs of imports. Import prices of HRC re-rollable grade has increased from USD530/ton to USD560/ton.

According to our interaction with industry, the prices of long products have started moving up in last week, due to higher prices of sponge iron, pig iron and coke.

Sponge iron prices have increased by Rs1000/ton to Rs14000/ton. Many mills, who had accumulated inventories of pig iron in past 2 months, are now reporting that inventories have started depleting last fortnight. Steel scrap prices have moved up from recent lows of USD290/ ton to USD340/ton thereby fueling the demand for substitutes like sponge iron.

The margins of Tata sponge and Godawari are likely to expand because of lesser dependence on spot iron ore market. Godawari's iron ore integration has increased from 25% in 1HFY10 to 75% now.

To read the full report: METALS