Metals Sector Update - All Time High Spreads In A Deep Cyclical Sector: ICICI Securities 

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ICICI Securities Report

Capacity cuts in China (steel) fueled expectations of it becoming a net importer of the metal.

Yet, as data shows, higher spreads continue to incentivize higher production in March 2021.

Global recovery, fiscal stimulus, environmental, social and governance (ESG) driven supply cuts/cost incidence have been fuelling expectations at these sky-high spreads, ignoring the deep cyclicality of the sector.

We do expect demand destruction across regions as prices consolidate at current levels; current signals of possible price control out of China further reinforce our view.

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