Metal Sector Update - All time high spreads in a deep cyclical sector By ICICI Securities
![](https://portfolio.investmentguruindia.com/investmentguruimages/upload/post/2021/04/2bab73fc764feb94406305e16fa8c1cd.jpg)
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Capacity cuts in China (steel) fuelled expectations of it becoming a net importer of the metal. Yet, as data shows, higher spreads continue to incentivize higher production in Mar’21. Global recovery, fiscal stimulus, ESG driven supply cuts/cost incidence has been fuelling expectations at these sky-high spreads, ignoring the deep cyclicality of the sector.
We do expect demand destruction across the regions as prices consolidate at current levels; current signals of possible price control out of China further reinforce our view. As charts 1-4 highlight, spreads for Indian players have crossed CY09 highs – Tata Steel’s EBITDA for Q1/Q2FY09 was ~ Rs 26000/te, and expected Q1FY22E EBITDA is higher than the same.
Chart 6 highlights that current US spreads, have crossed past 70 year inflation adjusted highs by a margin. We believe, most of FY22E deleveraging is in the price. Reiterate REDUCE on Tata, JSPL, SELL on JSW Steel, and HOLD on SAIL.
To Read Complete Report & Disclaimer Click Here
For More ICICI Securities Disclaimer https://www.icicisecurities.com/AboutUs.aspx?About=7
Above views are of the author and not of the website kindly read disclaimer
![](https://portfolio.investmentguruindia.com/uploads/news/insurance 123.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Axis Securities Ltd.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Wipro.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/2b1715f7e03b51b0ac9c014eb224fc1f.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/gdp22.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Geojit Financial Services.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Dollar retures 2.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/health22.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Arvind Kapil, MD and CEO, Poonawalla Fincorp.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/stock8.jpg)
More News
![](https://portfolio.investmentguruindia.com/investmentguruimages/upload/post/2021/07/96ad603386e16303fe603f5625748d51.jpg)
Telecom Sector Update - Subscriber run-rate hit by second COVID wave led lockdown By Motilal...
![Banking Sector Update : FinShift 3.0: Focus shifting towards profitable growth, while managing regulatory compliance By Emkay Global Financial Services](https://portfolio.investmentguruindia.com/investmentguruimages/upload/post/2022/12/b8055bb13f838194ceeb5ab052384fb7.jpg)
![Aviation Sector Update : Industry yields benefit from GoFirst`s suspension of operations - JM Financial](https://portfolio.investmentguruindia.com/investmentguruimages/upload/post/2023/06/45dee4689f4db5e2d224365cbfa62f14.jpg)
![Infrastructure Sector Update: Strong investment intentions, healthy tendering, awarding outlook bright - Anand Rathi](https://portfolio.investmentguruindia.com/investmentguruimages/upload/post/2022/10/eb31a363cee8a99f7e8a48a114dd2a14.jpg)