Metals sector to see gradual uplift

After an impressive rally of nearly 22% in calendar year 2022, the Nifty Metals index has seen modest returns of 18% so far in 2023. The performance was hindered by several challenges: a strong US dollar, subdued global demand, cost inflation, and China's delayed economic recovery. China's pivotal role in the metals market means its economic shifts have significant bearing on demand and pricing in the sector.

- Vineetha Sampath

For instance, declining steel prices in China influenced Indian market trends. The price of domestic steel, or hot rolled coil, in December stood at about ₹55,100 per tonne, a 5% drop from levels seen at the beginning of the year, as per data from SteelMint. Besides weak global demand, domestic steel prices were pressured by increased steel imports. Not only realizations took a hit, but margins also remained tight. Price of coking coal, a key input used in the production of steel, has risen 4% through 2023, according to data from CoalMint. Iron ore, another key raw material, has also seen a rise in its prices.