Ind-Ra: Steel demand and output in India to improve further in Jan-Mar

Thursday, 02 January 2020 17:06:10 (GMT+3)   |   Istanbul

India Ratings and Research (Ind-Ra), a part of Fitch Group, has stated that in the last quarter of the fiscal year 2019-20 (ends March 31, 2020) steel demand in India will pick up further, while the first signs of improvement started to be seen in the third quarter. “The demand in 2H FY20 is, however, not likely to witness the same levels as in FY19,” Ind-Ra said in its report, published on January 2.

Higher prices pushed up Indian steel mills profits in December. Realisation per metric ton of HRC improved by INR 2,200/mt ($31/mt) in mid-December compared to September. Demand for longs has been delayed after the monsoon season due to the ban on construction activities to address the pollution levels in the Delhi-NCR region in November, but it was partially lifted in December.

Moreover, steel mills will try to increase production levels in the January-March quarter and to build up stocks, fearing the possible disruptions in iron ore supplies because of delays in the auctions of iron ore mines, the licenses for which will expire in March 2020. “With the possible disruption, steel players will look to increase production levels over the remaining FY20 and also capitalise on improved gross spreads,” Ind-Ra stated.

It is expected that Indian mills will become more competitive in the global arena as India’s Ministry of Steel will publish a ‘white paper’ within the next three to four months outlining the roadmap for reducing the tax burden on domestic steel producers.

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