CLSA in its report on 14/July/2010 report on Indian Steel sector has said. “Cost of iron ore and coking coal of steel is set to decline by US$62/tonne in FY12 and headline steel prices should also plummet”. This would be Negative for TATASTEEL, SAIL & JINDALSTEEL which have captive mines positive for company’s converters like BHUSANSTL & JSWSTEEL the report said.
China which is facing overcapacity + China steel almost in the red as prices fall –CISA report says. Whenever China sees a problem they can flood the market so investor should take informed decision as Commodity prices are cooling globally on growth concerns, if India has high price this could become a Dumping ground, Lower Steel Prices can benefit user industry.
News Collected.
Rio Q2 iron ore output dips, flags China risks
SYDNEY, July 14 (Reuters) - Rio Tinto on Wednesday reported a 2 percent fall in second-quarter iron ore production from a year ago and raised concerns of a possible double-dip recession and slower Chinese growth. Still, the world's No.2 iron ore miner said it was running its mines close to capacity and forecast total 2010 output of 234 million tonnes, slightly up on an earlier forecast and ahead of 2009's 217 million.
Two major China steel mills guide August prices lower
SHANGHAI, July 13 (Reuters) - Two of China's top steel mills cut some August prices on Tuesday, bowing to pressure from slowing demand in major steel-using markets that has already forced many of their rivals to cut production. Baosteel, one of the top three steelmakers in China and the world, kept some of its prices unchanged but cut others by up to 300 yuan ($44.31) per tonne, or around 5 percent from July, marking a second successive month of falling prices.
SHANGHAI, July 16 (Reuters) - China's massive steel sector, which has begun cutting production in the face of falling prices and softening demand, is nearing the break-even point, the China Iron & Steel Association (CISA) said on Friday. "Most steel products prices have extended falls in July, to a level almost below the mills' production costs, and this will continue supporting prices," CISA said in a statement on its website.
The July-September period will see erosion of profitability of steel companies as the gloomy demand scenario would prevent them from hiking rates amid high input cost pressure, a government official said today. "The current quarter would be the weakest link in the financial year 2010. Margins, profitability of steel companies will take a hit amid high input cost pressure, sluggish demand scenario,” Joint Plant Committee Chief Economist A S Firoz told PTI.
Stocks in India to Cap Gains on Valuations, Downgrades, Merrill Lynch Says
India’s benchmark stock index, the best performer among measures for the 20 biggest equity markets last quarter, may cap gains after share prices exceeded the outlook for earnings, Bank of America Merrill Lynch said. “Markets are slightly on the higher side of valuations,” Jyotivardhan Jaipuria, head of research at the local unit of Bank of America Merrill Lynch, said in an interview in Mumbai yesterday. “We will have a spell of earnings downgrades now which is largely driven by what’s happening around the world.” http://www.bloomberg.com/news/2010-07-13/indian-stocks-to-cap-gains-on-valuations-downgrades-merrill-lynch-says.html
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