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Steel News August 15, 2019 09:30:04 AM

Ind-Ra Envisages Weak Steel Sector Fundamentals

Paul Ploumis
ScrapMonster Author
The muted demand from auto sector is likely to impact domestic steelmakers in the country, the report says.

Ind-Ra Envisages Weak Steel Sector Fundamentals

SEATTLE (Scrap Monster): The latest report published by India Ratings and Research (Ind-Ra) on India’s steel sector suggests weakness in sector fundamentals in FY20. The twin impact of softer steel prices and higher input costs, caused by lower demand situation will hit the country’s steel sector. The muted demand from auto sector is likely to impact domestic steelmakers in the country, the report says.

The report foresees weak fundamentals, mainly on account of various factors including softening of prices, elevated raw material prices and subdued demand. However, the impact of the above is likely to be partially offset by favorable demand-supply balance.

ALSO READ: Indian Steel Ministry Announces Draft Policy on Steel Scrap

According to Ind-Ra, the steel demand from housing and infrastructure sectors are likely to remain robust, backed by various government schemes. However, the demand from auto sector is expected to remain muted. Further, any material delay in auction of merchant mines before the March 2020 deadline would lead to disruption in domestic steel production in FY21, said the rating agency.

Ind-Ra foresees tightness in supply of coking coal. In spite of output cuts by large Australian miners, the country is likely to maintain its monthly import levels. Consequently, the coking coal prices are expected to remain flat. However, the iron ore prices are likely to record bearish trend in the near to medium term. It must be noted that iron ore prices have surged higher by 48% to $135 per tonne during the month of July this year.

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