Broking firm Jefferies feels steel prices are likely to move up in the near-term despite the government levying a minimum import price (MIP) to counter dumping by overseas producers.
“Recent extension of safeguard duty increases headroom for price hikes, but domestic steel fundamentals may not support steep price hikes,” says a note by the firm.
Even with the government levying a safeguard duty in addition to the import duty, which will curb imports, local prices will take their cues from the domestic supply in the near-term, feels the broking firm.
Jefferies expects Chinese steel prices, which are in a rally now, to be peaking soon.
Sector valuation is no longer cheap, adds the broking firm.It sees an improvement operating margins for the sector in FY17 as the benefit of the duty curbs begin to show.
The firm recommends a 'hold' on JSW Steel and Tata Steel stocks. It is not so upbeat on SAIL and has an 'underperform' rating on its stock.
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