Improved outlook for steel business

A recent study by a leading credit rating agency has pointed at strong demand growth trends in the steel business in the country. According to the report, fresh demand from automobile and construction sectors are driving the growth in steel business. “Driven by a strong demand growth in Q4FY2018, domestic steel consumption growth has improved to 7.9% in FY2018, up from 5.2% registered in 9MFY2018. Resilient demand from the automobile sector and improving demand for longs from the construction sector remained the key growth drivers during Q4FY2018. Despite a lack of participation by the private sector capex, the Government’s infrastructure push and rising consumer spending are likely to keep domestic steel consumption growth at about 6-7% in the medium term,” the report released by ICRA maintained.

Commenting on the improved domestic steel demand, Jayanta Roy, Senior Vice-President, and Group Head – Corporate Sector Ratings, ICRA, said “Encouraging domestic demand conditions, buoyant international prices, and a weaker rupee have resulted in domestic hot rolled coil prices rising sharply from Rs. 40,000/MT in end-December 2017 to close to Rs. 45,550/MT by end-May 2018. Downside risks to international steel prices however may emanate from a possible slowdown in domestic demand growth within China, leading to higher exports going forward.”

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