Stocks of major metal companies are unlikely to get a boost from the decline in prices of key raw materials as domestic demand for the metal remains weak. Local demand for steel usually picks up in October and stays strong until May. Jun-Sep is a lull season for the sector because southwest monsoon rains halt construction activity in the country. Fall in prices of coking coal and iron ore is expected to improve the margins of domestic steel producers.
However, companies such as JSW Steel and Steel Authority of India are not expected to benefit much from the decline in raw material prices. Steel Authority of India's capital expenditure plan is seen keeping its debt levels high. Due to this, the benefit of lower coking coal and iron ore prices will be minimal for the company.
