Steel Capacity Utilization to Dip to 75% in Current Fiscal Year

SEATTLE (Scrap Monster): The domestic steel capacity utilization levels are likely to drop to 74-75% in the current fiscal year, said the latest report published by Fitch Ratings. It must be noted that capacity utilization in India had declined to 77% in FY20. Also, Fitch foresees domestic steel demand in the country to fall by around 10% in FY21.

The report notes that alloy production is likely to remain flat. At the same time, the number of secondary steel units will witness notable increase, thereby resulting in lower capacity utilization in the domestic steel industry. The secondary steel producers account for nearly 47% of the domestic steel industry. Meantime, the long-term steel demand scenario is expected to remain positive.

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According to Fitch Ratings, sectors other than construction and infrastructure are likely to account for nearly 40% of the overall steel demand in the country.

As per available data, the domestic crude steel production capacity in the country reported 6.8% CAGR growth during the past five years to total around 142.24 million tonnes (Mt) in 2018-’19. The finished steel production edged higher marginally by 0.8% to almost 102 Mt in FY20. The consumption too was up by 1.4% at 100.06 Mt.

The report notes that operating growths are expected to surge to hit levels above 80% over the next five-year period. The large players would continue to operate at robust capacity levels, it adds.