26 August 2022
Metal stocks came in a under a bit of fire this week with Nifty Metal losing 2.3% in average value over that of the previous week.
This is likely to be the scenario next week also as uncertainties around price outlook and margins play in the minds of the metal sector investors.
According to a report by Kotak Institutional Equities earlier this week the domestic steel prices have declined 20% in the last three months due to regional price weakness and that they would continue to remain under pressure given the current premium to import parity. It also said that even if export duty on steel were to be cut it will have only limited benefits.
Downside risks to prices are also seen for aluminium. The brokerage felt that current aluminium prices, which have remained range bound in last one month after seeing a sharp fall earlier, are not likely to rise as majority of smelters in Europe were running at cash losses and production curtailment announcements were starting to be made by the producers.
Headwinds in metal and mining sectors still persisted, said Edelweiss Securities in a sector update today. It said that domestic hot rolled coil price in the traders market slipped further this week "owing to high inventory at steel producers and expectations of price cuts in the first week of September."
It also pointed to a slowing demand for secondary rebars leading to a dithering in its prices.
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