Date:25/02/2006 URL: http://www.thehindubusinessline.com/2006/02/25/stories/2006022501581700.htm

Back Steel, iron ore stocks turn active on Rly Budget

Jayanta Mallick
Kohinoor Mandal

Key positives
Freight corridor, new lines, gauge conversion
Keonjhar-Daitari link bodes well for Sesa Goa
Bao Steel (China) hiking of CR price by $45-$48 per tonne

Kolkata , Feb. 24

STEEL and iron ore stocks reacted positively today over the Railway Budget's proposed investments in creating freight corridors and the suggestion of a graded freight discount for loyal users.

Undertone for the steel counters also turned positive on an early indication of global steel price trend getting firm.

Mr V.S. Jain, Chairman of SAIL, said the Rail Budget would have a marginal overall impact for the PSU steel maker. But he felt that the proposal for investments (freight corridor, new lines, gauge conversion & doubling of lines) and a 25 per cent increase in wagon manufacturing would boost demand for steel.

Mr P.K. Mukherjee, Director (Finance) of Sesa Goa, told Business Line that the proposals are particularly positive for Sesa Goa. "It seems that Keonjhar-Daitari link would be taken up, which would reduce the distance between our Barbil mines and Paradeep port by half".

He also felt that freight rate for iron ore may soften on account of new classification (user) limits.

He also agreed that globally iron ore price was likely to improve on emerging demand-supply balancing in the near term.

According to industry analysts, Thursday's Bao Steel (China) price hikes (CR by $45-$48 per tonne and hot rolled by $75 a tonne) signalled a trend reversal.

Iron ore price too is expected to mark up internationally on revival of Chinese demand.

Mr Gul Tekchandani, a stock strategist, said globally the steel prices seem to be changing direction after substantial reduction in inventories. Across the markets, buoyancy in steel and iron ore was witnessed on Friday.

Tata Steel finished in the green at Rs 423. After recording a 3 per cent gain at day's peak, SAIL closed in the red at Rs 63 on late profit booking. The trading volumes in the two steel counters, however, doubled.

JSW and Essar Steel closed with a gain of one per cent each. Sesa Goa moved up by one per cent to finish at Rs 1,035.