Steel scrips soar on hopes of rebuilding boom

Anticipation of a reconstruction boom, following the tsunami aftermath in the country and across Asia, has sent major steel scrips "" Tata Steel, Steel Authority of India Ltd (SAIL), Jindal Vijaynagar Steel Ltd (JVSL), Jisco, Ispat""soaring on the bourses.

The steel scrips touched their 52-week highs and then shed some gains to settle at lower levels, posting record volumes. The Bombay Stock Exchange (BSE) Metal index also touched a 52-week high of 6,210.94.

Market analysts felt that the reconstruction boom would be a boon for steel companies. The surge in demand was a result of the direct increase in offtake expected in the domestic market as well as the indirect effect due to the reconstruction across South Asia.

Industry sources had anticipated a shortage of steel across the globe in the new year and that was prior to the tsunami disaster.

The global consumption in 2004-05 was expected to be around 990 million tonne, which was 743 million tonne, even three years back. Industry sources said, the shortage could be to the extent of 12-13 million tonne.

A shortage implied, prices would increase. Coupled with increased demand, railways had recently hiked freight rates for coal, iron ore and manganese ore, which could build up the case for prices increases. Steel producers were contemplating price hike in the new year by around Rs 500 per tonne.

The premiums in the market indicated that there was demand for steel and could lead to an increase in prices. Premiums for flat products were around Rs 300 per tonne while the premiums for long products from Steel Authority of India Ltd (SAIL) was in the Rs 500-600 a tonne and that of Vizag Steel was around Rs 1,000 a tonne.

The Tata Steel scrip today touched a 52-week high of Rs 396.35 on the Bombay Stock Exchange (BSE) and closed at Rs 30.95. On the National Stock Exchange (NSE), the scrip touched a 52-week high of Rs 396.65 and then closed at Rs 391.65. Volumes were at 48,33,109 and 1,04,69,144 on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), respectively.

SAIL touched a 52-week high of Rs 64.35 on BSE and Rs 64.40 on NSE. Volumes were at 1,29,63,672 and 3,74,05,553 on BSE and NSE.

JVSL touched a 52-week of Rs 18.15 on BSE with volumes of 1,25,32,375 and Rs 18.10 on NSE with volumes of 3,15,68,971 sahre. Jisco touched a 52-week high of Rs 341.05 on the BSE with a volume of 5,30,968 and Rs 341.45 on NSE with a volume of 11,00,031. Ispat tocuhed a 52-week high of Rs 25.65 on BSE and NSE. Volumes were at 2,52,56,152 on BSE and 3,57,73,343 on NSE.