Under 100 Words: A Compact Summary
Domestic steel stocks rallied approximately 5% on Monday due to China’s reduced steel production. Indian firms like Tata Steel, Jindal Steel, and SAIL saw notable increases. BNP Paribas warns of import risks amid China’s production decline while India turns net steel exporter (Muted Chinese steel production).
- On Monday, the stocks of domestic steel companies saw a nearly 5 percent surge, driven by subdued steel production figures from China.
- Tata Steel, Jindal Steel, and SAIL witnessed share price increases of 4.59 percent, 4.10 percent, and 3.49 percent respectively.
- Similarly, other steel firms like APL Apollo, JSW Steel, NMDC, Ratnamani, and National Aluminium also experienced gains ranging from 0.5 percent to 3.3 percent. Meanwhile, the BSE Sensex saw a 0.4 percent rise in Monday’s intra-day trading.
- One significant reason for the increase in stock prices is the muted steel production in China during January and February, with analysts projecting a similar trend for March due to subdued demand.
- China’s crude steel output only rose by 1.6 percent year-over-year, while the daily average declined by 2.1 percent year-over-year (Muted Chinese steel production).
- The National Bureau of Statistics (NBS) reported that China, the world’s largest steel producer, manufactured 167.96 million metric tons of steel in January and February combined.
- This combined reporting is customary to adjust for the fluctuating impact of the Lunar New Year holiday, which falls at different times during these months (Muted Chinese steel production).
- The daily output averaged around 2.8 million tons, compared to 2.18 million tons in December 2023 and 2.86 million tons during the same period in 2023, as reported by Reuters (Muted Chinese steel production).
- A report by research firm BNP Paribas highlighted the downside risk to domestic steel prices from cheaper imports. This risk persists as domestic prices remain higher than import prices from China and Japan. A decrease in production in China may enable domestic companies to capture a larger share of the Indian market.
- Aside from sluggish Chinese output, another positive sign for India could be a 9 percent year-over-year growth in steel demand and a 14 percent year-over-year increase in production in February 2024.
- The country also became a net exporter of steel in January and February, according to analysts at BNP Paribas in their March report (Muted Chinese steel production).
- Steel exports rose to over 1 million tonnes in February 2024, compared to 0.85 million tonnes in January 2024 and 0.64 million tonnes in December 2023.
- Steel imports in January and February 2024 were each at 0.8 million tonnes, compared to 1.3 million tonnes in December 2023. Consequently, India became a net exporter of steel in January-February 2024, as noted in the report.
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