JSW Steel announce Positive Outlook for future

JSW Steel Ltd has announced the following Outlook: The global crude steel production grew at 8.4% during H1, 2007 mainly led by 17.8% growth in China. Chinese exports are higher in first six months at 35 Mn Mt. US had a marginal positive GDP growth in Q1, 2007 due to slowing economy, lower auto production and decelerating construction. However, rising demand for Pipes & Plates is noticed in the US driven by booming Oil & Gas Industry. Monsoon in Asia has slowed down construction activities.

The international prices of steel products as a consequence of above factors, has come down by around 7-10%. The appreciating Rupee against the Dollar and the lower international steel prices led to an adjustment of the prices in the domestic market by around Rs 600-800 per tonne from July 01, 2007.

The recent policy announcements by Chinese Government to restrict steel exports by introducing licensing procedures, reducing export rebates and introducing taxes on exports are expected to slow down the export of steel products from China. It is reported that the inventories at various service centers are coming down and the demand continues to be buoyant. Indian economy has shown robust growth in the current financial year backed by a growth of 11.7% in the industrial production in April/May 2007. Lower inflation reported recently is expected to result in lower interest rate regime, which will spur growth in Automobile and Retail sector, a big positive for steel industry. In this scenario, the steel prices are expected to remain stable and may pick-up from third quarter.

Source : Equity Bulls

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