Fwd: Commodity Report - Steel: Room for upside

Steel prices: Room for upside

CMP Rs22,160, BUY

Target price Rs24,200, Upside 9.3%

ä Global steel demand expected to grow by 6.8% , led by intense infrastructure activity in the BRIC nations.

ä Chinese government curbs on export of primary metals to reduce over supply situation in the global market.

ä Raw material costs, which are generally pass through, are expected to swell resulting into higher metal prices.

ä We recommend BUY with a price target of Rs24,200 on the NCDEX, an upside of 9.3%.

Steel prices: room for upside

Strong demand momentum driven by the infrastructure sector is expected to continue in the near term. The higher steel consumption globally will allow steel manufacturers to pass through the rise in raw material costs, which are expected to jump by ~US$55-65 per ton in CY08. We expect steel prices to rise from current levels in the near term and remain around there. We expect, average CIS hot rolled coil prices to be US$590 in Q4CY07 and US$610 in CY08. On the NCDEX (National Commodity & Derivatives Exchange Ltd.), investors can buy with a price target of Rs24,200 per ton, an upside of 9.3%.

http://www.indiainfoline.com/adserver/InverstorReport_steel21107.asp

Warm Regards,

Tarang Bhanushali

India Infoline Commodities Ltd.

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