These 2 metal stocks are Edelweiss' top picks in the sector
Premium- The brokerage house maintains its positive view on the sector with Tata Steel and JSPL as the key stock picks in the metals space
Brokerage and research firm Edelweiss anticipates better prospects for metals sector as steel prices in China have started rising again on improvement in demand from the real estate and infrastructure sectors. All in all, the brokerage house maintains its positive view on the sector with Tata Steel (target price: ₹1,950) and JSPL (target price: ₹575) as the key stock picks in the metals space.
Despite the weakness in regional markets, the brokerage sees signs of a demand pick up in China as local governments continue to sell bonds, whose proceeds would be utilised to boost the infrastructure and real estate sectors. As a result, Chinese domestic HRC and iron ore prices has risen together.
In the domestic context, the sharp fall in coking coal price has resulted in spreads remaining resilient despite a fall in steel prices. Taking cognisance of emerging positive signs in China, Edelweiss maintains its favourable stance on the sector with Tata Steel and JSPL as its preferred picks.
Furthermore, as a result of better domestic realisation, Chinese players are withdrawing export offers. The brokerage expects lower export volume from China to maintain both regional price and market balance. That said, it will keep close tabs on further development in this regard, the note added.
Domestic HRC prices in traders’ market declined further last week in the wake of subdued demand and threat of imports. Edelweiss expects the recent weakness to have a bearing on notified prices of major steel players in December 2021.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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