Steel Demand Picks Up In First 9 Months Of FY18: ICRA

A pick up in domestic steel demand, sustained buoyancy in the auto sector and a recovery in construction and capital goods along with consolidation in the sector as part of the insolvency resolution of stressed steel assets is tipped to favour production growth in steel sector, according to ratings agency, ICRA.

Steel demand growth has improved to 5.2 percent in nine month period of FY2018 as against 4.5 percent in seven months of FY2018, aided by a healthy growth rate of 6.2 percent reported in the month of December 2017.

Going forward, ICRA said it expects the domestic consumption growth to remain favourable on the back of the Government’s thrust on infrastructure, in particular towards affordable housing, power transmission and the Railways in the Union Budget 2018-19. A combination of favourable domestic demand, remunerative prices in both international and domestic markets, and lower growth in imports are likely to support domestic steel production growth in the near term.

Commenting on the possible trends in the steel sector, Jayanta Roy, senior vicepresident, ICRA said: “After two consecutive price hikes totaling to ₹3000/ton effected by domestic steelmakers in Q4FY2018 due to improving demand, rising raw material costs, and a buoyancy in international steel prices, ex-works prices of domestic hot rolled coil (HRC) reached ₹43,000/ton in the fourth week of February 2018.”