• The brokerage has maintained its watchful outlook on the metals sector with JSPL and Shyam Metallics being top picks
Domestic brokerage and research firm ICICI Securities highlighted that there are divergent trends in steel stocks in China- rebar inventory has increased, however, HRC inventory has declined. However, on the positive side, the real estate sector is showing early signs of recovery. The brokerage still maintained its watchful outlook on the sector with JSPL and Shyam Metaliks being key stocks owing to their upcoming cost efficiency and volume growth potential respectively.
Metal stocks to buy, sell, add as recommended by ICICI Securities -
Jindal Steel (Buy)
Jindal Stainless (Buy)
SMEL (Buy)
APL Apollo (Buy)
NMDC (ADD)
Tata Steel (ADD)
“While the real estate market is showing early signs of recovery, we await greater clarity on the stimulus measures in China after the CNY and their impact on overall steel demand. In India, the fall in spreads after Jan 23 The companies profitability is at risk of deteriorating in Q4FY23. We maintain our cautious outlook on the sector with JSPL (Target Price: ₹750) and Shyam Metaliks (Target Price: ₹425) as our top picks due to their long-heavy product portfolio maintained," the note said.
Channel check by ICICI Securities indicates that the $15/t rise in Chinese steel prices since the CNY holidays has been below market expectations. Besides, buying interest from the UAE market has slowed down. In Vietnam, traders are waiting for Formosa's price offer for February 23 before deciding on a price. Europe, however, offers increased opportunities for Indian players after the earthquake in Turkey - Turkey is the largest exporter of steel to Europe.
"We believe Indian players are well placed to fill the gap, although the latest offers from Europe are slightly lower ($10/te) WOW. Crude material spreads fall from ₹1,650/TEW to ₹23,230 (Mar-22) lowest since 2015), as coking prices edged up by US$17/te wah. Global iron ore prices, however, declined from CNY to US$ 1.5 per cent due to uncertainty around the pace and extent of demand revival in China. ranged between $120-130/te.
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