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    Rising metal prices pose both headwinds & opportunities: 5 stocks from pipe & wire industry that can rise up to 35%

    Synopsis

    Today, when the whole market is down, there is one sector which is leading the recovery, metals. Both ferrous and non ferrous. Partially because of the fact that Russian metal has been sort of ousted from the markets with the US and UK taking measures to keep it out of exchanges. Also because there are enough indications from China that demand might be getting stronger. Now there is an inverse relationship between the rising price of metal and margins of the many user industries. So when there is an expectation that metal prices are going to rise, there is bound to be a negative reaction in some of the sectors and industries. As an investor one needs to realize that the user industry, where there is higher “value addition” to the metal and there is a strong “brand”. The impact on margins is much lower. Infact when these stocks react to the narrative which might hit the street sooner than later, it is probably the time to have a look at them with a long term perspective.

    As metal prices rise, it is very likely that one might hear about how the industries which use metals as raw materials are going to be impacted in a negative manner. There is no doubt about the inverse relationship between the rising price of metal and margins of the many user industries but over the years the “value addition” and “ brand” in some of the user industries has changed the strong inverse relationship. So a steel pipe player, who has
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    The Economic Times