Steel realisation likely to be steady at Rs 40,000-41,000 per tonne: Crisil

Consequently, volume could de-grow 12-15 per cent this fiscal," Crisil said in a note. Speaking about the margin of secondary steel makers, Crisil Ratings director Mohit Makhija said, "...

Average long steel realisation is expected to be steady at Rs 40,000-41,000 per tonne on stable supply, ratings agency Crisil said on Tuesday. It said domestic long steel sales volume is seen declining by only 12-15 per cent in the current fiscal following the COVID-19 pandemic, due to two factors -- central government's spending on rural and urban housing and infrastructure, and deleverage balance sheets owing to low capital expenditure.

"While capital expenditure by the central government will prop demand from these segments at healthy levels, declining spending by state governments and weak demand from the real estate sector will affect the overall offtake. Consequently, volume could de-grow 12-15 per cent this fiscal," Crisil said in a note.

Speaking about the margin of secondary steel makers, Crisil Ratings director Mohit Makhija said, "... Operating margin will test the lower range of 5.5-6.5 per cent, marking a fall of nearly 100 basis (points). This is largely due to the pandemic-driven shutdown in the first quarter of this fiscal, which led to a near-complete shutdown of operations for many producers." Secondary long-steel makers haven't undertaken large capex between fiscals 2016 and 2021..