A host of steel shares surged today on renewed buying interest and some of them even notched up high volumes.

Among the major gainers were Essar Steel (up 11.5% to Rs 14.80), Ispat Industries (up 8.7% to Rs 6.20), Bhushan Steel (7.8% to Rs 38), Uttam Steel (up 7.6% to Rs 10.25), Jindal Vijaynagar Steel (JVSL) (up 7.3% to Rs 7.29), Steel Authority of India (Sail) (up 7% to Rs 13.32) and Jindal Iron & Steel (Jisco) (up 2.8% to Rs 107.20).

However, private sector steel No. 1 Tisco (down 4.3% to Rs 154.75) was in the red today as the stock went ex-dividend from today.

Heavy volumes marked trading in Sail (44.5 lakh shares on BSE), Essar Steel (21.1 lakh shares) and JVSL (14.4 lakh shares) today.

Expectations that hot rolled coil prices may firm up with China announcing fresh import quotas has ensured a firm trend in steel shares. After witnessing a sharp surge over the last few months, global steel prices have been softening on account of concerns over the sustainability of growth in global demand for steel in general, and from China in particular. The concerns were accentuated by the recent SARS episode, which is likely to impact economic growth in China.

Recently, there were reports that steel majors hiked prices of local long steel products by Rs 200-500 per tonne following strong domestic demand from booming construction activity in the country.

Steel scrips have staged a revival on the bourses over the past few months on the back of firmness in global steel prices. Many steel makers reported a turnaround in financial performance for FY 2002-03 on the back of the firm steel prices.

The domestic steel industry heaved a sigh of relief after China announced plans to import 10.18 million tonnes of steel from various countries, including India, in 2003-04. As a result of fresh quota of imports by China, the industry expects gloabl HR prices to improve by US$ 20 per tonne to US$ 280 per tonne.

The quota fixed for Indian steel exports to China is 1.8 lakh tonnes of HR coils and 4 lakh tonnes of CR coils. In addition, China will also import 6.6 lakh tonnes of colour coated steel and 9.4 lakh tonnes of silicon steel, for which no specific quota has been fixed for India.

The domestic industry expects that steel exports to China will be around 33% of India's steel exports, as the country has the opportunity to export over 20 lakh tonnes of steel to China, inclusive of colour coated and silicon steel.

On the back of strong demand for steel, which was also vindicated by the rise in prices, both Sail and Tisco recorded impressive results.

For Q4 ended 31 March 2003, Tisco recorded a massive 283% rise in net profit to Rs 469.08 crore (Rs 122.47 crore) on a 39.5% increase in net sales to Rs 2,664.76 crore (Rs 1,911.48 crore). For FY 2002-03, the company recorded a 394% rise in net profit to Rs 1,012.31 crore (Rs 204.90 crore) on a 29.3% increase in total income to Rs 8,771.71 crore (Rs 6,783.12 crore).

Sail recorded a turnaround, registering a net profit of Rs 241.65 crore for Q4 compared to a net loss of Rs 417.07 crore in the corresponding period of the previous year. Total income increased by 25.5% to Rs 5,671.43 crore from Rs 4,519.99 crore in MQ 2002. For the full year, the company reduced losses to Rs 304.31 crore on total income (net of excise) of Rs 17,591.09 crore.