Near term outlook for Indian finished Steel sector looks positive

Steel re-bar prices moved up on Monday with a positive bias for the
near term. Prices moved up by Rs 100-500/MT at places like Durgapur, Hyderabad,
Ahmedabad and Raipur. 

Re-bar prices in Chennai have also noticed a sudden hike in prices in line with the recent power cuts in the state. Prices have went up by to Rs 1,000-1,200/MT for long and structural steels.

“Demand for finished steel in Gujarat has been robust.  A spurt in demand from infrastructure and
government projects have been noticed in past two months”, said a TMT trader based in Ahmedabad.

The near-term outlook for finished steel looks optimistic
with improving steel prices amidst improving demand and softening raw material
cost.

Lower coking coal cost (Q4 contract at USD235/MT declines by
17.5% QoQ) as shown by augurs is well for steelmakers, although thermal coal
could remain dearer on tight linkage coal supply.

Iron ore prices in India have also softened as NMDC has
announced a price cut for Q4FY12. Further, likely removal of ban on iron ore
mining in Karnataka (CEC recommendations have raised expectations) could
improve iron ore supply.