Rising prices of coal to weigh on steel companies' September qtr earnings

While the YoY show is expected to be stellar on low base and high realisations, QoQ profit growth is estimated to be weak for most players

Rising prices of international coal – both coking and thermal - used in the making of ferrous and non-ferrous metals, respectively, are expected to have an impact on margins of metals companies in July-September quarter (Q2) as steel companies may see margins getting eroded, while the base firms could stand to benefit, said brokerages.

Since metals is a cyclical sector, a year-on-year comparison for earnings would give a better picture. However, due to the ongoing pandemic and last year’s low base, sequential comparison has been taken in consideration to show a clearer picture on pricing and volume trend.

Coking coal