Metal Stocks Outlook for the week – 07 to 11.Jul.2014
Stocks of metal companies are expected to trade up ahead of the Budget on Jul 10 on
expectations that the reforms will address issues bogging down the sector. The expected
Budget reforms are seen benefiting the ferrous sector more than the non-ferrous sector. We
believe there is a strong possibility that steel imports would be removed from free trade
agreements, a strong positive for companies like JSW Steel and Tata Steel. India currently
has free trade agreement with Japan, which is exempt from the 7.5% import duty.
We are divided on the possibility of a cut in iron ore export and import duties. A cut in
export duty would benefit Sesa Sterlite, while a cut in import duty would benefit players
without captive iron ore mines like JSW Steel. The possibility of a cut in import duty would
be higher. India currently levies an import duty of 2.5% on import of iron ore, and 30% on
export of iron ore.
Stocks of metal companies are expected to trade up ahead of the Budget on Jul 10 on
expectations that the reforms will address issues bogging down the sector. The expected
Budget reforms are seen benefiting the ferrous sector more than the non-ferrous sector. We
believe there is a strong possibility that steel imports would be removed from free trade
agreements, a strong positive for companies like JSW Steel and Tata Steel. India currently
has free trade agreement with Japan, which is exempt from the 7.5% import duty.
We are divided on the possibility of a cut in iron ore export and import duties. A cut in
export duty would benefit Sesa Sterlite, while a cut in import duty would benefit players
without captive iron ore mines like JSW Steel. The possibility of a cut in import duty would
be higher. India currently levies an import duty of 2.5% on import of iron ore, and 30% on
export of iron ore.
