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Motilal Oswal Report
Domestic steel market, which has been resilient to international price movements and demand, has started showing some mixed signs.
Domestic steel prices, which were quoting at a premium to international prices, have started sliding down with hot rolled coil steel prices correcting Rs 1,500/tonne and rebar prices correcting Rs 400/tonne in the last one week.
Similarly, export prices have also reduced $7/tonne as against price hikes seen across Europe and North America (up €25/tonne and $60/tonne respectively) over the last few days.
Even international steel manufacturers such as Taiwan's CSC have hiked its March 2023 list price to $20-40/tonne. Similarly, the world's largest steel manufacturer Baosteel has hiked its Mar-23 list price by $29/tonne and Arcelor Mittal has hiked its Mar-23 flat steel list price by €40/tonne.
Though steel demand in India is expected to be strong in Q4 FY23, steel companies are facing headwinds with raw material prices soaring. Though this is not expected to reflect and have any significant impact on the margins of the steel companies in Q4 FY23, the management across the board have guided for stormy tides from the end of Mar-23 onwards, if the prices of raw materials do not cool down. If the prices continue to remain at these levels, working capital cycle and margins of the steel companies would get adversely impacted.
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