ICRA Detects Early Signs of Indian Steel Sector Revival

SEATTLE (Scrap Monster): The credits rating agency, ICRA Limited, announced that it has spotted early signs of steel sector recovery in India beginning second quarter of the ongoing fiscal year.

According to them, the steel production and demand in the country were badly impacted by the outbreak of coronavirus pandemic and the nationwide lockdown measures announced by the government to curb the spread of the disease. This has led to rising steel inventory levels. Consequently, steel producers were forced to operate at reduced capacity levels. The reduced demand in domestic market also led to surge in exports, especially to China.

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The report noted that easing of travel restrictions and gradual improvement in domestic demand situation has resulted in sector recovery. The steel producers, especially blast furnace producers, are likely to witness healthy rebound, supported by hike in steel prices and rising capacity utilization rates. It must be noted that the Indian steel industry have exceeded 77% capacity utilization levels towards the end of Q2 FY21.

There has been a marked improvement in operating environment, which is evident from the steady rise in capacity utilization rates of steel mills from the lows of 27% in April this year to as high as 78% in August 2020, said Jayanta Roy, Senior Vice-President & Group Head, Corporate Sector Ratings-ICRA.