Sept quarter earnings of metal cos muted amid sluggish demand
Analyst believe that the broader underweight on the sector may continue for some more quarters before these issues are sorted out.
“The sector, in general, is influenced by the meek international macro environment. Amid falling demand, the September quarter numbers for some companies were supported by forex gains,” said an analyst.
During the quarter, Sesa Goa, NMDC, SAIL and Hindalco reported a 2-63% decline in their topline. Sesa Goa was particularly hit as its mining operation in Goa and Karnataka were completely shut due to regulatory issues. Heavyweights Tata Steel and Hindalco disappointed the Street as the former reported a loss at consolidated level, while the latter witnessed its standalone profit dip 30%.
“While Tata Steel’s Europe sales were bit of a surprise for the traders, its domestic business underperformed due to higher costs and weighed on its overall performance,” said an analyst. The company reported a net loss of $2 per tonne in the quarter compared to $35 profit in the same quarter last year.
Steel prices have declined about 5% q-o-q during the three months to September due to new capacity additions and weak demand. As a result, steel producers are currently utilising 75-78% of
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