While the prices of various steel products have risen 5% to 10% to date,
OSK is not overly excited since this relatively small increase took place during a seasonal peak period.
Furthermore, iron ore and scrap metal prices bounced backed strongly almost immediately after the abrupt plunge in Oct 2011 and continued to stay at relatively high levels.
Although scrap metal and iron ore fine prices averaging USD450 and USD140 a tonne respectively in 2012, OSK stills expect steel prices to face downward pressure as steelmaking operations continuing to experience meager margins in the medium term.
Below are the target price/fair value and rating for selected stocks in steel sector.