Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Steel: Grim scenario continues - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Aug 31, 2001

    Steel: Grim scenario continues

    The downturn in the industrial activity has hit the steel sector. During the quarter ended June 01, finished steel production declined by 0.4% compared to an impressive growth of 14.6% in the same quarter of the previous year.

    The decline in overall finished steel production during April-June 2001 mainly reflects the fall in production of hot roll (HR) coils and HR sheets by 8.7% and 5.9% respectively. In the corresponding period of the previous year, HR coils production had grown handsomely by 36.5% while that of HR sheets had declined by 5.8%. The fall in HR sheet production to an extent indicates a shift to value added cold roll (CR) products.

    However, a slowdown is also apparent in CR sheets production, which grew by a mere 7% during the June quarter of the current year compared to 24% growth in the same period of the previous year. Production growth of bars & rods was maintained at 6.6% compared to 6.9% growth in 1QFY01. The only category where growth was higher was GP/GC sheets, which grew by 16.1% as against a marginal 0.6% growth in 1QFY01.

    Steel production slides
    ('000 tonnes) April-June '00 April-June '01 Change Growth in June '01
    Steel structurals 589 496 -15.8% -19.1%
    Bars & rods 2,198 2,344 6.6% 11.8%
    HR coils 2,136 1,950 -8.7% -8.9%
    HR sheets 122 115 -5.9% -13.8%
    CR sheets/coils 970 1,039 7.1% 2.4%
    GP/GC sheets 375 435 16.1% 4.9%
    Finished steel 7,318 7,257 -0.8% -0.4%

    The steel industry, particularly the flat products segment is going through one of its worst phase. This is mainly due to a sharp decline in the demand for automobiles. Both HR and CR prices have come down hitting the realizations of the steel companies.

    Recently, even the long product prices have also come down by Rs 1,300 per tonne to Rs 11,700 per tonne. The prices failed to maintain the rally witnessed in the past three months. The major reason attributed for the crash is increased activity at the ship-breaking yard at Alang in Gujarat, which supplies scrap to most producers. Scrap from broken-down ships is used to make ingots and billets, which are then rolled into different long products like re-bars, rounds, structurals and channels. Most of these products are used in the construction industry. Incidentally, a fall in the Alang yard's activity was the major reason for rise in prices earlier. Also, the additional capacity from Jindal Vijaynagar Steel (JVSL) in the long sector could have led to a fall in prices.

    Falling steel prices and bleak export scenario could further worsen the current situation. This is likely to affect the earnings growth of steel companies in the current year.



    Equitymaster requests your view! Post a comment on "Steel: Grim scenario continues". Click here!


    More Views on News

    Tata Steel: A Strong Quarter (Quarterly Results Update - Detailed)

    Aug 12, 2017

    Tata Steel reported a robust operating performance on the back of strong domestic and European operations.

    SAIL: Loss at EBITDA Level Due to Higher Raw Material Cost (Quarterly Results Update - Detailed)

    Jun 12, 2017

    The company registered a negative EBITDA of Rs 2.64 billion during the quarter. This is on the back of an increase in raw material prices.

    Tata Steel: Strong Quarterly Performance (Quarterly Results Update - Detailed)

    May 22, 2017

    Tata Steel reported a robust operating performance on the back of strong domestic and European operations.

    SAIL: Pressure Continues. Loss at Operating Levels... (Quarterly Results Update - Detailed)

    Feb 15, 2017

    SAIL has reported a 26.2% YoY increase in the topline while the bottomline reported a loss of Rs 7.94 billion.

    Tata Steel: Loss from Discontinued Business Mars Performance (Quarterly Results Update - Detailed)

    Sep 27, 2016

    Tata Steel has reported a 6.3% decline in the topline while the bottomline was in red in 1QFY17.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)