Uncertainty in the government policy is slowing down the excitement of Indian steelmakers who were once actively seeking for Stemcor Indian assets.
Over the past seven months, Stemcor has been in the news consistently owing to its lustrous offer of BRPL Pellet plant. The bid submission was on a continuous delay, finally submitted last week. And now, the market sentiments are upside down. Recalling the initial invites for bids where almost every major steelmaker participated, it narrowed down to 3 finalists and the most attractive contender being JSW.
A source from one of these companies communicated that the 3 companies have submitted their final bid owing to lack of interest in buying at this point of time. Possibly, Stemcor could not see this coming. Had it been 5 months back, there were higher chances that bid price could’ve been higher. But now, it does not make much of a sense purchasing now, as ROI are neither secure nor predictable.
Current market analysis indicates that making huge investments at this point of a time is not a good idea owing to the following reasons:
- The export policy of government is uncertain at this time. There might be an export duty on Pellets in the near future.
- Shah commission has asked to put a ban on Iron ore mining along Baitarini River in Odisha.
- As the Pellet capacity is predicted to increase many folds in this year, the prices of Pellet is going to be under stress.
Now, it will be interesting to see if the Steel giant Stemcor agrees to sell its assets on a lower bid or not.