ICRA Foresees Significant Steel Demand Growth in FY23

SEATTLE (Scrap Monster): The ratings agency ICRA has maintained a positive outlook for steel industry over the next twelve-month period.

The domestic steel industry earnings are predicted to remain healthy in FY23, despite some moderation in earnings on account of rising input cost pressures. The rising steel prices are likely to partly absorb the surging coal and energy costs. Overall industry outlook looks positive, said ICRA report.

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Mr. Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA noted that domestic steel demand witnessed healthy sequential pick-up from December last year, driven by increased momentum in construction sector activity. The sector closed FY22 with a double-digit growth of around 11%. The steel demand is forecast to grow at 7-8% in FY2023, supported by the government’s large infrastructure spending plans.

The sanctions on Russia could open new export markets for Indian steel mills, especially in geographies like Europe, the Middle East and the U.S. However, they are likely to face input cost pressures in the near term as Russia happens to be one of the key suppliers of steelmaking raw materials to Indian steel firms. Meantime, the steel industry is more resilient to withstand project-related risks, ICRA noted.