Steel Stocks Outlook: Seen up next week on hike in product prices
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K.Karthik Raja
Feb 2, 2008, 2:03:43 AM2/2/08
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Steel Stocks Outlook: Seen up next week on hike in product prices
Steel shares are likely to see heavy buying next week as
major companies have announced a hike in product prices for February,
All major producers of steel products, including Steel Authority
of India Ltd, Tata Steel Ltd and Ispat Industries Ltd, raised prices
by up to 2,500 rupees per 1 tn to counter rising input costs.
"The hike in prices not only offsets some of the cost pressure, it
also
indicates that there is significant demand for steel in the market.
Indian automobile industry, one of the leading consumers of steel,
reported strong growth Friday for the month of January, despite rising
prices and higher loan rates for vehicle buyers.
"High costs have weighed on earnings of steel companies during the
quarter but with demand picking up, it expect better times for
steelmakers in the coming months.
Research said among companies that will remain in focus next week
are JSW Steel Ltd and Ispat Industries Ltd.
This week, JSW Steel signed a joint venture agreement with Chilean
firm Minera Santa FE for development of iron ore mines in North
America.
JSW Steel owns 70% stake in the JV. The Mumbai-based steelmaker
plans to invest about $500 mln to develop mining capacity of 20 mln tn
per year in 3-4 years. This is a huge booster dose for the stock, as
the company already has tie-ups for coal mines in Mozambique.
Thursday, Ispat Industries approved the hive-off its captive jetty
business as a new unit. The company may also plan to rope in a
strategic partner for the jetty unit, an official said Friday.
Ispat's jetty is located near its steel plant at Dolvi in
Maharashtra.
Ispat also plans to hive off its power business into a separate
entity
and also invite a strategic partner for a minority stake in the
company.
Some analysts voiced concerns that Jindal Steel and Power Ltd may
postpone its plan to de-merge its power business and issue shares of
the new company to the public. The market is volatile, and the ongoing
initial public offers have taken a beating. There are chances JSPL
will defer IPO plan for its power unit.
The JSPL stock has surged over the last six months in anticipation
of the power unit de-merger and eventually an IPO.
Following are the week-on-week closing prices of key steel shares,
in rupees, on National Stock Exchange:
.
Company Closing Level Closing Level % Change
Feb 1 Jan 25
.
Steel Authority 225.45 229.75 (-)
1.9
Tata Steel 776.45 709.95
9.4
JSW Steel 1,034.80 957.00 8.1
Jindal Steel & Power 2,230.10 2,360.00 (-) 5.5
Nifty 5317.25 5384.45 (-)
1.6
Sensex 18242.58 18380.59 (-) 0.8
Steel shares are likely to see heavy buying next week as
major companies have announced a hike in product prices for February,
All major producers of steel products, including Steel Authority
of India Ltd, Tata Steel Ltd and Ispat Industries Ltd, raised prices
by up to 2,500 rupees per 1 tn to counter rising input costs.
"The hike in prices not only offsets some of the cost pressure, it
also
indicates that there is significant demand for steel in the market.
Indian automobile industry, one of the leading consumers of steel,
reported strong growth Friday for the month of January, despite rising
prices and higher loan rates for vehicle buyers.
"High costs have weighed on earnings of steel companies during the
quarter but with demand picking up, it expect better times for
steelmakers in the coming months.
Research said among companies that will remain in focus next week
are JSW Steel Ltd and Ispat Industries Ltd.
This week, JSW Steel signed a joint venture agreement with Chilean
firm Minera Santa FE for development of iron ore mines in North
America.
JSW Steel owns 70% stake in the JV. The Mumbai-based steelmaker
plans to invest about $500 mln to develop mining capacity of 20 mln tn
per year in 3-4 years. This is a huge booster dose for the stock, as
the company already has tie-ups for coal mines in Mozambique.
Thursday, Ispat Industries approved the hive-off its captive jetty
business as a new unit. The company may also plan to rope in a
strategic partner for the jetty unit, an official said Friday.
Ispat's jetty is located near its steel plant at Dolvi in
Maharashtra.
Ispat also plans to hive off its power business into a separate
entity
and also invite a strategic partner for a minority stake in the
company.
Some analysts voiced concerns that Jindal Steel and Power Ltd may
postpone its plan to de-merge its power business and issue shares of
the new company to the public. The market is volatile, and the ongoing
initial public offers have taken a beating. There are chances JSPL
will defer IPO plan for its power unit.
The JSPL stock has surged over the last six months in anticipation
of the power unit de-merger and eventually an IPO.
Following are the week-on-week closing prices of key steel shares,
in rupees, on National Stock Exchange:
.
Company Closing Level Closing Level % Change
Feb 1 Jan 25
.
Steel Authority 225.45 229.75 (-)
1.9
Tata Steel 776.45 709.95
9.4
JSW Steel 1,034.80 957.00 8.1
Jindal Steel & Power 2,230.10 2,360.00 (-) 5.5
Nifty 5317.25 5384.45 (-)
1.6
Sensex 18242.58 18380.59 (-) 0.8
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