2023 in review- Steel manufacturers ride on strong domestic demand momentum. Steel prices influenced by global trend.

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Tata Steel , Jindal Steel and Power , JSW Steel and Steel Authority of India have seen their share prices rise 9-28% year to date during 2023. The gains have been led by strong steel demand in the country even though steel prices and raw material prices saw regular volatility. The steel demand remained exceptionally strong led by Government’s spending on Infrastructure during 2023.

The steel prices, however, saw volatility under the influence of international steel prices. As rising interest rates led to weak demand in the developed countries, the China demand also disappointed despite removal of Covid related cubs. The weak China demand meant more exports out of China which pushed the international steel prices further down.

The raw material prices also saw volatility. Analysts at Jefferies India Pvt Ltd in their recent report said that “2023 was a tough year for metals due to the combination of Fed rate hikes, a strong dollar, an underwhelming China reopening, weak demand in Europe, and cost inflation" The positive is that steel demand in India continues to remain strong as we exit 2023. The steel demand is regularly being supported by Governments spending even though private Capex is yet to see significant uptick say analysts.

Also Read-Red Sea News- Shipping, Ports stocks in focus as crisis unfolds The key positive also is that international steel prices also have started to improve from lows. Asian flat (Hot Rolled Coil) steel price, after falling 22% over March-October has risen 8% in the last 2 months, suggests Jefferies Data. The Jefferies analysts say that Asian steel spread, however, is still near the lowest level in a decade, and they believe the risk is on the upside.