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Systematix Research Report
The pricing buoyancy in metals and allied raw materials witnessed in H1 FY22 has decreased in Q3 FY22. Steel producers are likely to see the first QoQ margin decline after five quarters of steady expansion, led by-
marginally weak steel prices,
a spike in coking coal prices and
a weak domestic demand scenario along with the slowdown in exports impacting volumes.
International benchmark sea-borne iron ore prices have rallied after falling sharply in May-2021. Consequently, domestic iron ore prices have also corrected but are relatively less impacted and would likely see an uptick with a lag.
Coking coal prices would impact margins from Q4 FY22 onwards as companies generally maintain one to two months of inventory; prices have started correcting and would help ease margin pressure in H1 FY23.
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