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Domestic prices of steel, of which India is among the three top global producers, are expected to climb 10-12 per cent this year, with the government’s measures to revamp infrastructure and consumption likely reviving demand for the alloy from carmakers and construction companies.
In anticipation of a turnaround, steel shares have climbed 32-79 per cent from their October lows, in kilter with buoyant domestic and international prices of the commodity.
“The downward trend in steel prices should stop in 2020 and a gradual upward move has already started from the last week of December,” said Manoj Jain, head of commodities at IndiaNivesh Research. “Demand from the automobile and real estate sectors will also revive on the prospect of better domestic rabi crop production this year. We expect a 10-12 per cent upside move in steel prices in 2020.”
Measures to revive consumption should boost physical demand, while investors should expect decent returns due to attractive valuations. Leading producers expect a northward trend in output and demand.
“The December quarter and the next should be good, given the numbers reported by auto companies, IIP numbers or GST figures. It took six months for inventory de-stocking until September, when the inventory levels reached the lowest. Once this restocking is complete, demand needs to sustain,” said Seshagiri Rao, group CFO of JSW Steel.
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- [Editor:kangmingfei]
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