Indian Steel Sector Margins to Collapse

The end of the monsoon season by early-December will lead to pickup in construction and infrastructure development projects, which in turn is expected to boost the demand for steel long products.

SEATTLE (Scrap Monster): The country’s steel sector margins are likely to deteriorate in FY 20, in comparison with the previous fiscal, on account of huge slowdown in demand and substantial increase in raw material prices, says the latest report published by India Ratings and Research (Ind-Ra). The report is based on study conducted among 38 Indian steel companies.

According to Ind-Ra, the EBITDA levels during the current quarter are likely to witness marginal improvement, mainly due to marginal improvement in sector realizations and a decline in raw material prices. The domestic steel prices edged higher by INR 500-INR 700 per tonne during November. Also, iron ore prices saw further reduction by INR 100 per tonne during the month.

ALSO READ: India's Steel Sector Crisis Warrants Urgent Intervention

The end of the monsoon season by early-December will lead to pickup in construction and infrastructure development projects, which in turn is expected to boost the demand for steel long products.

Ind-Ra report highlighted government’s decision to pull out of the Regional Comprehensive Economic Partnership (RCEP). Had India entered into the partnership, the anti-dumping duty on steel imports into the country would have become null and void.

Meantime, the Union Steel Minister Dharmendra Pradhan stated that the country’s steel sector is currently witnessing growth, after a slowdown. The country has turned out to become a net exporter of steel during this financial year.

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