Steel: Prices Decline, But Spreads Improve; Imports From China A Key Concern: ICICI Securities

ICICI Securities Report

Domestic HRC prices continued to decline due to elevated levels of imports. Spot spreads, however, improved on continuous fall in coking coal price. We might see domestic HRC prices remaining under pressure for some more time as imports continue unabated.

Longs prices, however, have stabilised and the price hikes taken in early-Sep-24 have been largely absorbed. China’s share in overall imports has risen to almost 37% (versus 15% on average over the past five years) which is a key concern.

That said, we stay optimistic on the sector as domestic demand continues to be strong and spreads for non-integrated players are likely to improve. Our key picks in the space: Jindal Steel and Power Ltd. (Buy; target price: Rs 1,240) and JSW Steel Ltd. (Buy; target price: Rs 1,140).

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