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Stocks of major steel companies are seen rising next week because of a technical bounce back, and on expectation of bullish earnings for Jan-Mar quarter. The way steel stocks have been declining in the last few sessions, a technical bounce is imminent. Stocks of steel companies declined in the range of 1-3% in the week ended Friday tracking the broad market. On the earnings front, since prices of coking coal have declined 50% on year in the quarter ended March, steel companies are likely to benefit despite the not-sostrong steel prices. Coking coal and iron ore are key raw materials used to make steel. Though iron ore availability continues to remain an issue in the domestic market, it is JSW Steel which will be the most affected. Steel Authority of India and Tata Steel have captive iron ore mines, and hence supply of iron ore is not an issue at all. Steel companies hiked product prices for April. Given the fall in iron ore and coal prices, steel companies should be able to improve margins on the back of these price hikes. Essar Steel raised steel prices by 3-4% early this month, and so have SAIL and Jindal Steel & Power
