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    Metal stocks rally up to 6% last week. What's cooking?

    Synopsis

    While the recent price hikes in the regional market and expectations of better demand in Europe appear encouraging, we would wait for more clarity on stimulus measures in China and their impact on the overall steel demand, it said.

    Metal stocks rally up to 6% last week. What's cooking?Agencies
    Shares of metal companies such as Hindalco, JSW Steel, and Tata Steel rallied up to 6% in the last week amid higher export bookings and reports that Indian steel mills are eyeing price hikes in January on the back of improved global cues and the firming up of international prices.

    Shares of Hindustan Zinc, Steel Authority, Jindal Steel & Power and Vedanta also rose over 3% in the week gone by.

    "Owing to the seasonal uptick in construction activities in Q4, rebar- HRC premium has now expanded to Rs2,500/te. Regional HRC prices rose by US$10-15/te, following price uptick in China," said brokerage firm ICICI Securities.

    "Our channel checks indicate that demand from Europe is likely to improve as buyers are looking to replenish the stocks post new year holidays. European mills are firmly quoting a minimum price of EU€650/te for HRC. As a result, Indian players and Indian steel mills have raised HRC export offers by US$45-50/te WoW to Europe," the brokerage said.

    While the recent price hikes in the regional market and expectations of better demand in Europe appear encouraging, we would wait for more clarity on stimulus measures in China and their impact on the overall steel demand, it said.

    The brokerage firm ICICI Securities retained its cautious outlook on the ferrous sector with JSPL (TP: Rs750) and Shyam Metalics (TP: Rs425) as its key picks owing to their longs-heavy product portfolios.

    The brokerage is also positive on APL Apollo with a target price of Rs 1,225 as being a downstream player, it is relatively insulated from adverse price movements.

    Also, according to CRISIL Ratings, global steel prices (free-on-board, China) are set to stabilise in calendar 2023 on-year, after falling over 40% to $570-590 per tonne in December 2022 from the early-April peaks of $1,000 per tonne on tepid steel demand.

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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