Indian steel firms are expected to report strong Q4 results, led by stronger domestic steel prices.
It is expected that operational income (EBIDTA) at Tata Steel and JSW would grow 18 percent quarter-on-quarter (q-o-q). Volumes will remain flat at SAIL, but it will benefit from stronger long product prices, industry analysts said.
Domestic demand for steel has bounced back over the past year, growing at 7.6 percent y-o-y. This growth has been supported by a strong pick-up in infrastructure execution in the past year. JSW Steel, for instance, saw sales of its long products grow 11 percent y-o-y.
Long-steel products are bulky and difficult to ship. So, as local construction activity has increased, especially of highways, bridges and metro lines, contractors have had to depend on locally made long-products to meet demand. Till last year, long steel sold at a discount of 15-17 percent to flat steel. The gap has since narrowed to 10 percent.
Long steel includes categories like TMT bars, which go into construction and infrastructure. Given that the government has set aside ₹14.3 lakh crore towards infrastructure expenditure, it is seen that this momentum is likely to sustain with steel production growing at over 5 percent over the next two years.
この記事は Steel Insights の May 2018 版に掲載されています。
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