MUMBAI (Commodity Online): NCDEX steel has posted impressive gains in the month of October thanks to a rally in the commodities market in international markets.
At home, weak industrial growth is cramping up the steel sector. Industrial growth between April-August was at a low 5.6% against the 8.7% during the same period last year. RBI's tight monetary policies have created a credit crunch and the construction sector has not performed as well as expected.
POSCO recently opined that they believe the prices to fall until the first half of next year. Both Nippon steel and JFE downgraded their full year outlook in view of the oversupply amidst the declining demand.
So, is it all downhill from here? Not necessarily. The 12th 5 year plan has a reported $1 trillion in infrastructure spending planned into it and the same will be effective next year.
At NCDEX, steel long November contract has returned impressive gains for the month of October. After opening at Rs 30320 on October 1, the metal closed at Rs 32080 at the month-end to record a neat 5.80% in gains.
Technically, Steel long is trending in an uptrend channel and prices are currently near the upper channel trendline. The 14-day RSI is also around the overbought levels. As such prices could see a decline in the near term provided fundamentals support.
