BNamericas reported that Peruvian bank BCP has given a buy recommendation to local steelmakers Aceros Arequipa and Siderperú.

BCP said in a report that the companies are expected to see a boost in demand for their products in the upcoming years thanks to construction projects and infrastructure works.

BCP said that "The size of the domestic [steel] market exceeds USD 6 billion and in 2010 national steel production saw a 12.8% increase thanks to greater activities in the real estate market and the continuity and start up of new projects for hotels, housing complexes and infrastructure."

The recommendations are also based on expectations that local steel prices will gradually increase to similar levels as international prices.

BCP has assigned Aceros Arequipa a fundamental value of PEN 3.79 per share, which represents a 23.6% upside from its share price of PEN 3 on Lima stock exchange BVL.

Aceros Arequipa produces corrugated iron, wire, profiles and other steel products for the construction sector at its Pisco and Arequipa plants.

BCP gave Siderperú a fundamental value of PEN 2.25 per share, equivalent to a 47.1% upside on price of PEN 1.53 per share.

Siderperú produces long and flat products at its plant in Ancash region's Chimbote city. The plant has liquid steel capacity of 520,000 tonnes per annum. Siderperú is a subsidiary of Brazilian steel group Gerdau.

(Sourced from www.bnamericas.com)