India’s steel companies leading metals towards best rally in decade

The country’s steelmakers are on course to leading the BSE’s metal index to its biggest quarterly gain in more than a decade, on the back of a recovery in consumption and surge in prices across the globe. The S&P BSE Metal Index has surged by around a third so far in the three months through December, jumping the most since the quarter ended June 2009. Metal companies are in earnings upcycle after two years of downgrades, and steel demand, as well as pricing, have improved sharply.

Steel Authority of India has rallied around 75 per cent. “While there has been a continuous increase of demand from China, on account of the government-aided growth and rising focus on sectors such as infrastructure and construction, the revival of demand from India is pushing steel prices even higher.” Steel prices have soared on the back of reviving demand, especially in China, and also due to iron ore bursting past $170 a tonne on concerns of a supply shortage in Brazil and Australia, the top exporters.