22 Dec, 2010
SteelMint Exclusive
Steel Long on NCDEX moved up sharply in the morning session whereas it remained stable later on.
Trading in physical market remained comparatively lower from the past few days as buyers remained cautious over rapid rise in prices.
Prices might correct to a certain extent as demand has started to cool off after rising sharply past week.
Liquidity is still one of the major concern for manufacturers. The recent surge in trading in past few days has further blocked the cash conversion cycle as demand remains poor from end users.
We have noticed gap increasing in regular and advance payment, which indicates that manufacturers require liquidity to keep their production intact., therefore they are offering handsome discount for advance payment.Gap has increased to Rs 500/Mt which used to be Rs 300/MT in regular course.
Experts feel that it would be preferable to remain cautious now and watch the market movements carefully. Liquidity crunch remains a problem in the market and rotation remains weak. Buyers are not comfortable taking position till next rally is noticed.
However, it may remain stable or move up marginally till demand from construction sector gains momentum.
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