Sector Update - Metallica - Headwinds not over yet - Emkay

Despite so much noises, steel prices did not see any recovery and instead slipped slightly further during the last fortnight (ending October 2nd). Iron ore prices seem to have been taking a breather from high volatility.

- The CIS Black Sea (FoB) HRC export prices fell by ~4% to US$538/ tonne. The World (average) HRC prices remained unchanged at US$628/ tonne. North American HRC prices continued to fall by 6% over last fortnight to US$610/ tonne, North European HRC prices declined by further 1% to US$496/ tonne.

- As expected, iron ore prices resumed their fall again, as demand worries continued from China. Indian origin iron ore prices (cfr, China) with grades 63%, 62% and 58% fell 4%, 5% and 1% respectively to US$103.8, US$104.2 and US$98.3/ tonne. We won't be surprised if further fall seen going forward.

Base metals prices on the other hand remained subdued...

- Base metals prices after rallying for almost a month, paused during the last fortnight, as US Dollar index gained slightly again major basket of currencies

- Copper, aluminium and zinc on LME fell by 1%, 3%, 2% and 14% respectively to US$8276, UD$2070, UD$2056; lead prices meanwhile rose 1% to US$2294.

Believe, most of the sentimental boosts have already been there in the prices and without sustainable recovery in the underlying demand prices would remain vulnerable, as headwinds are still not over.

Source : Equity Bulls

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