• Domestic prices (HRC) have risen Rs2,750/T (US$40/T) from the lows of October, driven by higher regional prices, supported by restocking led demand.
• Regional (China / East Asia) prices are up US$60-70/T in the same period. With Indian prices being less remunerative, imports into India have dropped meaningfully in the last few months. With domestic prices trading at -6% / flat vs import parity from China (historical average premium 3% / 14%), domestic steel prices have more steam left due to lower imports and higher input costs.
• In the domestic market, we believe bidding of merchant iron ore mines in Odisha and ferrous demand uptick are the most important factors to watch for. If bids are at a significant premium, iron ore cost in the domestic market would go up and NMDC and iron ore self-sufficient players—Tata Steel and SAIL—are likely to gain. Besides, the longs value chain is likely to get significant fillip and players like JSPL are likely to benefit.
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
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