Commodity price tailwinds coupled with QoQ improvement in volumes is expected to aid domestic metal companies to report a healthy performance in Q2FY22E. During Q2FY22E, average steel prices are likely to be QoQ higher by ~Rs. 1000-2500/tonne vs. Q1FY22. Despite a sharp rise, coking coal costs are likely to witness only a marginal increase in Q2FY22E due to a lag in consumption as steel companies generally maintain a month or two of coking coal inventory. For Q2FY22E, we expect EBITDA/tonne of Tata Steel to increase QoQ while EBITDA/tonne of JSW Steel, SAIL is expected to moderate from Q1FY22 levels. For Q2FY22E, EBITDA/tonne of Tata Steel (standalone operations) is expected to come in at Rs. 36500/tonne (Rs. 35558/tonne in Q1FY22). For Q2FY22E, standalone operations of JSW Steel are likely to post an EBITDA/tonne of Rs. 25000/tonne (Rs. 26291/tonne in Q1FY22). SAIL's EBITDA/tonne for Q2FY22E is likely to come in at Rs. 18000/tonne (Rs. 19728/tonne in Q1FY22). Also, for Q2FY22E we expect steel companies to report QoQ improvement in sales volumes on the back of easing of lockdown restrictions. On the non-ferrous front, QoQ, zinc, lead, aluminium prices are up 3%, 10%, 10%, respectively, while YoY, zinc, lead and aluminium prices are up 28%, 25% and 55%, respectively.
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