Price Hikes Ramp Up Steel Counters
Steel stocks gained smartly today on the back of some frenzied buying at the counters and also due to the steel producers having decided to raise product prices.
SAIL surged 13.6 percent to close at Rs 9.55, while Tata Steel, rose 5.41 per cent to close at Rs 118.65 over its previous close.
Uttam Steel and Bhushan steel were the major gainers, having gained 20 per cent to close at Rs 7.55 and Rs 29.10, respectively. Essar Steel rose 18.3 percent to Rs 6.45, Jindal Iron. Steel was up to Rs 16.50, Jindal Strips rose by 10.5 per cent to Rs 70.20 and Jindal Vijay Nagar was up by 13 per cent at Rs 3.90.
It was only during the last weekend that there were reports that the steel producers were to raise product prices or have already raised prices.
Tata Steel increased prices from Rs 500 to Rs 800 per tonne effective from June 1. It is understood that Essar Steel and SAIL would also raise hot-rolled product prices by up to Rs 1,000 per tonne.
According to analysts the rise in stock prices of steel majors was due to the increase in rates of steel products in both the international and domestic markets. The prices have been seeing an upswing for the last one-and-a-half to two months.
During the last six trading sessions, steel scrips have seen a good rise between 10 per cent and 40 percent. Jindal Vijaynagar was up by 36.84 per cent from Rs 2.85 on May 27 to Rs 3.90 as of today. Bhushan steel was up 19 percent from Rs 24.45 to Rs 29.10. Jindal Iron was up 18.7 per cent from 13.90 to Rs 16.50. SAIL was up 20.1 per cent from 7.95 recorded on May 27 to Rs 9.55 as of today.
"Steel producers were encouraged to raise prices for the third time this year after two price hikes made since January 2002 were absorbed easily by the market. This has reflected in the stock prices of these scrips," said Kashyap Mehta, head-equity sales, Moneypore.com.
"Sales of flat-steel products such as cold-rolled steel, which is made from hot-rolled coils, have increased this year on the back of rising automobile sales," analysts added.