The financial results of steel companies for the third quarter of 2015-16 are expected to be flat, analysts tracking the industry said.
Analysts said that, because of subdued demand and discounted price of steel both in the global and local markets, nothing exceptional can be expected.
Goutam Chakraborty, Stock Market Analyst, Emkay Global, told ISMW, “The price of steel is hovering below Rs 1,000 –Rs 1,500 per ton. The low price and low demand of steel are casting negative impact on the revenue generation and profitability of the companies. Rupee depreciation against dollar also adversely influenced domestic steel manufacturers.”
Raw material price play a major role in profitability of any business. But in this case, even though, iron ore was also running at low rate, steel companies were unable to cash on it because of inadequate demand.
Two domestic steel majors, Tata Steel and SAIL did not even feel the advantage of drop in iron ore because they have their own mines and supply chain.
Another steel major JSW steel would have felt the price difference as it does not have its own iron ore mine but it had its own problem and in October, a blast furnace at Vijaynagar had to be closed for maintenance.
Source: ISMW