Stocks of major steel companies may decline slightly next week as they are expected to report disappointing Jul-Sep earnings amid continued sluggishness in demand. Global prices of steel have declined amid slowdown in the world economy, and reduced industrial activity in China. China is the world's largest consumer and producer of the alloy. Due to this, the demand-supply equation in that country has an impact on global prices of steel. In China, steel prices are currently down 25% from a year ago.
Tata Steel's European operations may have faced margin compression in Jul-Sep. Last week, Tata Steel had said it might cut more jobs at its European subsidiary Tata Steel Europe under a plan to make the arm leaner and more efficient. Over the past few quarters, Tata Steel Europe's earnings have been falling as the debt crisis in the Eurozone has slowed industrial activity in the region and dried up demand. European operations account for two-thirds of Tata Steel's total production capacity. JSW Steel stocks will face pressure also from media reports the Central Bureau of Investigation has filed a charge-sheet against the company's Chairman and Managing Director Sajjan Jindal in a probe into illegal mining in Karnataka. The company has said it would challenge the charges in court.
