Metal Stocks Outlook for the week – 11 to 15.01.2016
(To
trade down next wk on muted demand, prices)
( www.rupeedesk.in )
Shares
of metals and mining companies are seen trading muted next week
due
to the continued weakness in global demand and prices. However, the
likely
announcement of minimum import price for steel may lift these
shares.
The
sharp fall in Chinese yuan dragged down the share prices for most
metal
companies this week, as it makes the imports from the country even
cheaper,
and poses threat to domestic producers.
Chinese data, released earlier this week, showed that manufacturing
activity
contracted in the country for the 10th straight month in
December.
This would force the county's government to look at ways to
boost
exports of Commodities, and as a result reduce prices of products
like
steel.
The
announcement of minimum price can be a major game-changer, but
it
has been in news for weeks, and is still not announced. According to
reports,
the government is considering a proposal to put announcing a
floor
price for steel and steel products imported in India.
It
has already announced a safeguard duty of 20% on Chinese steel but
setting
minimum import price is a long term solution and a better
alternative.
The sharp fall in base metal prices is also likely to weigh on
metal
companies like Vedanta and Hindalco.