Shares of Tata Steel gained on reports that the turnaround in the international steel market will benefit the company greatly, market players said.. The stock of the Tata group flagship and largest private sector iron and steel company in India edged up 0.61 per cent to Rs 107.05, off its intra-day high of Rs 111.50. Over 3.44 lakh Tata Steel shares changed hands on the BSE.
Analysts said that increased domestic demand and an improving steel market will push domestic steel prices to international levels. Steel prices in the domestic market are currently 10 per cent lower than international prices.
The domestic demand for steel is still low, but an increase in demand for steel internationally could have a positive impact on Indian steel manufacturers. A decline in supply from Russia, Korea and Japan due to a rise in their domestic demand should also benefit Indian steel exporters, analysts opined.
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According to market sources, any rise in volumes of steel will have a major impact on the bottomlines of steel companies. However, the Indian steel sector has a long way to go before it witnesses a turnaround. Analysts hope to see a turnaround in the steel sector in the next six-seven months. The steel sector could benefit from the government's ongoing infrastructure programme, too, sources said.
Recently, steel companies increased prices of steel twice, by Rs 750-1,000 per tonne. The hike was mainly in hot-rolled (HR) coils, while long steel prices have been raised by about Rs 300-400 per tonne. Analysts expect steel companies to hike HR coil prices by another Rs 500 per tonne.