Steel margin improves
* In Ferrous space, Steel margins rose by 30% mom to US$371/tonne, backed by a combination of rising in steel prices (+6% mom) and decline in the price of Iron Ore and Coking Coal by 21% mom and 9% mom to US$62/tonne and US$191/tonne, respectively.
* In Non-ferrous space: Zinc and Lead rose by 2% mom and 6% mom, respectively whereas Copper fell by 4% mom. Aluminium prices remained flat at US$2111/tonne. Silver and Gold witnessed trend reversal and fell by 6% mom and 3% mom, respectively.
* “One Belt One Road” to create demand for 150mt steel, enough to keep China’s steel mills rolling for next 10 years at the current rate of production, as per a study by BHP. This, along with China’s war on pollution has kept steel prices sentimentally positive.
* In India, on the contrary, steel prices for both flat and long products fell by 6% mom and 4% mom while Iron Ore prices remained stable. We continue to prefer Non-ferrous companies over Ferrous. Hindalco, Vedanta, and MOIL remain our top picks.
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