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These factors, along with weak auto sales and sluggish construction demand, are contributing to the weak fundamentals of the sector. According to the Society of Indian Automobile Manufacturers, India's automobile sales growth in this financial year is seen at 3.6%, lower than the previous year. Likewise, steel demand from construction companies has been dwindling over the past couple of years because major infrastructure projects have been stuck for various reasons.
Earnings of most steel companies are expected to be disappointing and this will also keep the tone bearish in major steel stocks next week. Shares of JSW Steel have risen nearly 9% so far in the week. The steel maker produced 675,000 tn of crude steel in February, up 11% from the corresponding month last year. Production of flat-rolled steel products by the company, which find wide application in the automobile industry, rose 14% on year to 514,000 tn in February. However, production of long-rolled products, which find use in the construction sector, fell 14% on year to 132,000 tn.
Stocks of major steel companies are seen down next week due to weak fundamentals and expectations of bearish Jan-Mar earnings. Domestic steel prices have fallen below international prices due to sluggish demand for the alloy. Moreover, rise in cheaper imports from Japan and Korea are restricting local steel players from hiking their product prices.
These factors, along with weak auto sales and sluggish construction demand, are contributing to the weak fundamentals of the sector. According to the Society of Indian Automobile Manufacturers, India's automobile sales growth in this financial year is seen at 3.6%, lower than the previous year. Likewise, steel demand from construction companies has been dwindling over the past couple of years because major infrastructure projects have been stuck for various reasons.
Earnings of most steel companies are expected to be disappointing and this will also keep the tone bearish in major steel stocks next week. Shares of JSW Steel have risen nearly 9% so far in the week. The steel maker produced 675,000 tn of crude steel in February, up 11% from the corresponding month last year. Production of flat-rolled steel products by the company, which find wide application in the automobile industry, rose 14% on year to 514,000 tn in February. However, production of long-rolled products, which find use in the construction sector, fell 14% on year to 132,000 tn.
