Moneylife reported that after a lackluster performance throughout the year, Nomura expects near term pick up as rupee depreciation makes steel imports dearer which will revive local demand
The steel industry has been in the doldrums for the entire 2012 but Nomura's Equity Research expects a pick up in the near term.
It said "Several companies, according to media and broker reports, are sending signals that an uptrend could be imminent as they raise steel prices, indicating demand pick up. With rising global prices, and the rupee depreciation, we expect net imports to moderate from current levels. At the same time India would be entering a seasonally strong demand period and hence we expect demand to pick up from current levels."
However, Nomura has cited the weak rupee and high global prices as reason for domestic demand to pick up. It said "Historically, high fragmentation, economic woes in developed countries meant steel demand had been overall weak with benign sales. But slightly higher demand from China meant steel price didn't dip and was steady if not sideways. India is a net importer of steel, which means the rupee depreciation would lead to dearer steel imports. This could force companies to buy locally instead, thus inciting demand pick up."
