ICRA Predicts Notable Recovery to Domestic Steel Consumption in Second Half This Fiscal

SEATTLE (Scrap Monster): The latest report published by ICRA- the independent and professional investment information and credit rating agency predicts steel consumption in India to grow by almost 5-6% in FY 20, mainly backed by increased demand from infrastructure and construction sectors.

The ‘Outlook for Steel Sector in FY 20’ report notes that the domestic steel sector performance is likely to remain subdued during the first quarter of this fiscal year, due to several headwinds. However, the construction sector will lead the demand recovery growth during second half of the fiscal. The new regime’s thrust on infrastructure development projects will result in increased domestic steel demand, the ICRA report said.

Meantime, the country’s finished steel production is likely to decline by around 3-4% in this fiscal year, due to lack of major capacities that are likely to come up during the year. Many key players are expected to maintain previous year’s output growth at more or less the same levels. The finished steel production is estimated at around 115-116 million tonnes, whereas the consumption may likely touch 102-103 million tonnes.

The stable demand outlook is likely to lend support to domestic steel prices in India. The spike in international steel prices, on account of escalated raw material costs, will provide additional support to domestic steel prices. According to ICRA estimates, the international steel prices are likely to range between $525 and $550 per tonne, subject to volatility in iron ore prices.