India’s steel output may drop by 12%, consumption by 17% this fiscal: Care Ratings

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Biznextindia : India’s domestic steel consumption and production will remain steady in the 2nd half of the current fiscal. However, in the whole year of FY21 India’s crude steel output is likely to drop by 12% and consumption to drop by 14-17% mainly due poor first half, predicted Care Ratings.

“Domestic steel production and consumption is expected to remain steady going forward in H2FY21. For the whole year FY21 we expect crude steel production to be lower by 10-12% and consumption to be lower by 14-17%, mainly impacted by poor first half. While large players have reported faster return to normalcy after covid-19 impact, the recovery by smaller players are expected to be long and protracted due to their limited diversification and weaker financial flexibility” said Care Ratings.

While India produced 109 Million Tonnes (MT) of Crude Steel in FY20, it is likely to slip by 10-12% to 96-98 MT. Steel consumption also likely to  drop by 14-17% to 83-86 MT in FY21 from 100 MT in FY20.

“An up-cycle in international steel prices is expected in H2FY21 due to increased steel consumption mainly by China on the back of stimulus package unveiled by the Chinese government which is keeping demand for industrial metals high” said Care Ratings.

“Firm international prices and pick up in domestic demand will also boost domestic steel prices. Steel prices have already exceeded pre-covid levels and are currently at a marginal premium to world export prices.”

“Any continuation of rebound in coking coal prices will keep the steel prices firm. Iron ore prices have crossed USD 123 per dmt in September 2020, a level last seen in 2014, amid better Chinese demand and tepid supply due to severe weather conditions and covid induced restrictions in Brazil. However, prices are likely to retrace to lower levels in H2CY20 largely on the back of ramp up of production by the miners in Brazil and Australia”.

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