The Hindu Business Line : Tata Steel jumps 4% as Corus hikes price

Chennai, May 28 The stock of Tata Steel jumped 4 per cent on the bourses on Wednesday accompanied by surge in trading volumes, which zoomed to 2.24-lakh shares on the BSE against its two-week average of 1.49-lakh shares.

On the NSE, the stock jumped 4.19 per cent to Rs 903.35, with 15.79-lakh shares changing hands, of which 21.79 per cent or 3.44-lakh shares were deliverable quantity.

According to brokers, the stock rose due to the price hike initiated by Corus, which was acquired by Tata Steel.

Higher costs

“Global demand for reversing mill plate continues to be strong in all plate-consuming market sectors. At the same time, all steel manufacturers, including Corus, continue to incur significantly higher costs for raw materials and energy. As a consequence, Corus will be increasing prices for reversing mill plate by £60 per tonne effective to all dispatches from June 29,” Corus said in an announcement on its Web site.

Any price hike by the Corus is likely to benefit Tata Steel, and could boost its bottomline, said an analyst with Chennai-based brokerage firm.

“We believe the key beneficiaries, of the global price hikes, in Indian context, will be Tata Steel. The Government is planning to take various measures to cool the inflation by checking the rise in the domestic steel prices. In the current scenario, Tata Steel is unable to hike the price of products sold in domestic markets. The domestic steel major would benefit by this price hike by Corus as well as by the captive raw materials sourced from the UK company, compared with its peers in India,” said a recent research report from Emkay Share & Stock Brokers.

Global demand

Corus would also be raising prices for structural sections by £90 per tonne, with effect from August 3. “The price increases are a direct consequence of high global demand for steel, driving dramatic increases in the cost of raw materials,” Corus said in its Web statement.

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