Steel Stocks Outlook: 10-14.09.2012




Stocks of major steel companies are seen slightly up this week as sentiment is seen positive in the global markets on the European Central Bank's bond-purchase plan and China's infrastructure stimulus. On last Thursday, the European Central Bank unveiled an unlimited bond-buying programme wherein it would purchase bonds of Eurozone countries to clamp down on their surging cost of borrowing. Last saturday, China, the world's largest producer and consumer of steel, announced large infrastructure projects as part of its new stimulus package to revive economic growth in the country. China's stimulus package and Europe taking efforts to settle immediate debt concerns in the region is surely going to push up stocks of steel companies in coming sessions.

However, Domestic steel companies are not expected to gain much from the Supreme Court's decision to allow iron ore mining in the 'category A' mines in Karnataka, as the total quantity of ore from these mines would be only about 5 mln tn. The situation is not at all good in the local iron ore industry 5 mln tn from Karnataka is nothing, had it been 20-25 mln tn it would have been positive for steel producers. In August last year, the Supreme Court banned iron ore mining in Karnataka following rampant illegal mining in the mineral rich state.



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