Steel scrips have strong export prospects as the basing point, besides a strong uptrend in domestic steel prices recently.

And this has caused the scrip of private sector steel giant Tisco to gain 1.4% to Rs 159.60 in mid-morning trades today. Around 7.8 lakh Tisco shares were traded on BSE in just one-and-a-half hours of trading.

The scrip of public sector company and largest steel maker Steel Authority of India (Sail) showed a stronger rise, up 3.5% to Rs 16.55, though it was off the day's high of Rs 17.19. It clocked heavy volumes of 46.2 lakh shares .

Essar Steel (up 2.1% to Rs 12.60), Ispat Industries (up 3.8% to Rs 7.04), Bhushan Steel (up 4.3% to Rs 38.05) and Jindal Vijaynagar Steel (up 2.3% to Rs 7.36), all moved significantly upstream.

The hike in annual import quota announced by China has set off the latest uptrend in steel scrips. Tisco, for instance,  has gained 11.8% in the last five trading sessions to the current Rs 159.60. Sail has risen 34.6% in 12 trading sessions to the current Rs 16.55. The stock got an additional boost from last week's announcement that it would soon find a place in the S&P CNX Nifty. Essar Steel has risen 12.8% in the last five trading sessions to the current Rs 12.60.

Growing export prospects from China's announcing plans to import 10.18 million tonnes of steel from various countries, including India, in 2003-04 is the cause for much optimism in the domestic steel segment. As a result of the fresh quota for 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.

After successive increases since the last year, prices  started  softening towards the end of March as the market awaited the announcement of the new quota. The downtrend stemmed from a backlog in the Chinese market. China will continue to be a net  importer  of steel  with the production in China being around 160  million tonnes.

The Indian steel industry is also all perked up by the visit of the Prime Minster to China. It is reckoned that it would be the right opportunity to  ask for  an  increase in steel export quota and focus  on  promoting  bilateral trade in iron ore, aluminium and steel.

On the back of the surge in steel prices, both Sail and Tisco recorded impressive results for Q4 ended 31 March 2003.

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.