Indian long steel product producers will be direct beneficiaries of the government’s heightened immediate and medium term focus on infrastructure investment to pull the country out of the Covid-19 induced slowdown, rating agency, ICRA said in a report on Tuesday, August 24.
Long steel product demand has been ‘anaemic’ and construction activity will revive demand strongly lifting the fortunes of large and small producers alike, ICRA report said.
So far, available demand has largely been absorbed by large long steel producers leading to divergent capacity utilization trends between large and small steel companies, the report said.
While integrated mills were in a better position, secondary mills struggled with high input costs of scrap and iron ore shortage in fiscal 2020-21, ICRA said.
It might be noted that the Indian government on Monday announced that it will sell state-owned infrastructure projects including monetization of roads, airports, railways, power transmission lines, gas pipelines aiming to raise an estimated $81 billion to plug deficits in government finance.
Analysts said that the move was expected to boost infrastructure investments through two routes. For one, it will be an ‘asset exchange program’ wherein government assets will transfer to private investors and revenues accrued to government will be reinvested in infrastructure projects.
Secondly in tandem, infrastructure projects acquired by private investors will be expanded entailing fresh capital expenditure leading to boost of construction activities across sectors.