Firm trend

INVESTING INSIGHT

The stocks of companies engaged in the steel business firmed up between May and July 2004 on the Bombay Stock Exchange (BSE).

Overall firm steel prices in the last quarter was a key factor driving positive stock prices. The share price of Essar Steel jumped from Rs 16.30 on May 3, to Wednesday's close of Rs 27.00, up 65.64 per cent on the BSE. During the same period the stock price of Jindal Vijaynagar Steel shot up from Rs 8.73 to Rs 10.60, up 21.42 per cent.

In contrast, Raipur Alloys decreased from Rs 33.65 to Rs 28.95, down 13.96 per cent. Public sector steel behemoth SAIL Ltd ended flat from Rs 33.00 to Rs 33.70, up 2.12 per cent.

The shares of Tata Steel gained from Rs 342.50 to Rs 356.65, up 4.13 per cent. In the same vein, Sunflag Iron & Steel increased from Rs 6.97 to Rs 7.06 and Bellary Steels from Rs 1.70 to Rs 1.90.

Ahmedabad Steelcraft declined from Rs 8.25 to Rs 8.00, down 3.03 per cent. Steel Strips Wheels rose from Rs 35.95 to Rs 38.54, up 7.20 per cent, while Southern Iron & Steel closed at Rs 12.63 from Rs 6.13, up 51.46 per cent.

Steel prices had shot up to record levels in early 2004 before settling in the last few months as China imposed curbs to cool down its economy.

However, strong recovery in USA and other developed nations has led to a fresh rally in steel prices not entirely dependent on Chinese demand.

China's gross domestic product (GDP) growth for the second quarter of 2004 came down by 0.2 per cent to 9.6 per cent from 9.8 per cent in the first quarter. This year, Chinese steel consumption had been expected to grow to 300 million tonne (MT) from 250 MT last year. Chinese steel production last year was 220 MT.