Steel companies have seen significant appreciation. Shares of Tata Steel and JSW Steel are at multi-year highs. The stock market expects their record EBITDA numbers to continue for a few more quarters. So writes timesnownews.com in a recent article.
Steel shares make strong gains
Steel stocks have been a big contributor to the market rally. Tata Steel has moved from below Rs. 400 to Rs. 700 in the last 4 months, Jindal Steel from Rs. 165 to Rs. 340.
Commodity markets driving record numbers
This is due to the fact that the bull market in commodity markets has pushed the EBITDA/tn of these companies to record levels. The stock market estimates that these record levels will continue for a few more quarters. And even after the rally, big bull Rakesh Jhunjhunwala thinks steel stocks are terribly undervalued.
Indian steel prices slightly weaker in late January
Steel prices had taken a bit of a breather in late January and early February. Prices in India fell about 8% in the last 1 month after FM Sitharaman lifted certain import tariffs.
Chinese steel prices on the rise after Lunar New Year
Chinese prices also corrected in late January. However, prices rebounded after the Lunar New Year holiday. The release of positive macro data and tightening of supply triggered another rally.
Chinese steel production costs very high
VR Sharma of Jindal Steel told timesnownews.com, “Chinese steel production costs have reached a ridiculously high level of $650/tn, which is why they are importing steel.”
Source: timesnownews.com
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