Left Menu
Development News Edition

Ind-Ra revises downwards outlook on steel sector to 'negative'

PTI | New Delhi | Updated: 27-02-2020 16:22 IST | Created: 27-02-2020 16:22 IST
Ind-Ra revises downwards outlook on steel sector to 'negative'

India Ratings and Research (Ind-Ra) on Thursday said it has revised its outlook on the steel sector from 'stable-to-negative' to 'negative' for FY2021-21. The revision has been made seeing the steel demand growth expectations of 5 per cent and margin pressures led by iron ore price risks, the agency said in report.

High iron ore premiums for new mine owners both captive and merchant could shift the cost positions of steel mills, it said. "The slowing economic activity as reflected in Ind-Ra's GDP estimates of 5 per cent and 5.5 per cent for FY20 and FY21, respectively, would continue to affect demand growth in the steel sector and any significant pick-up is unlikely," Ind-Ra said in a report.

The rating agency said it expects steel demand growth to remain modest, in line with gross factor capital formation of 5.3 per cent in FY21. The Chinese steel demand growth risks amid increased ramifications from the corona virus outbreak could also impact global and domestic steel prices.

However, some benefits are also expected on softer imported coking coal and international iron ore prices, it said. "Global steel prices may come at risk, if Chinese steel producers could not reduce production growth in FY21 in line with the reducing demand in housing construction and the slowing Chinese economic growth, " it said.

The agency further said it expects the overall steel margins to remain modest in FY 2020-21, with slight improvements after "the industry witnessed EBITDA margins dropping. Ind-Ra expects the margins to bottom out in 4QFY20". The agency also believes that in case the steel demand does not strengthen up by

2HFY21 (second half of FY 2020-22) new capacity additions along with stressed asset ramp-up could put further pressure on the prices and plant capacity utilisation rates.


TRENDING

OPINION / BLOG / INTERVIEW

New farm bills in India: Focusing on farms or farmers?

... ...

Kenya’s COVID-19 response: Chaos amid lack of information

Confusing numbers and scanty information on how effective curfews and lockdowns have been in breaking transmission have amplified coordination and planning challenges in Kenyas response to COVID-19. Without accurate data, it is impossible t...

Farkhad Akhmedov: Calculating the price of impunity from the law

In insistences such as the battle over the Luna, Akhmedov has resorted to extreme legal machinations to subvert the High Courts decision and keep his assets from being seized. ...

Guinea’s elections hearken back to the autocracy and violence of its past

... ...

Videos

Latest News

Golf-Back nine charge powers Cantlay to Zozo Championship win

American Patrick Cantlay staged a back nine charge to speed past world number two Jon Rahm and number three Justin Thomas to claim a one shot win at the Zozo Championship in Thousand Oaks, California on Sunday. Cantlay, who began the day th...

PRESS DIGEST- Financial Times - Oct. 26

The following are the top stories in the Financial Times. Reuters has not verified these stories and does not vouch for their accuracy. HeadlinesUK considers shorter Covid self-isolation period httpson.ft.com3oqqISWRoyal Mails chairman says...

Three-quarters of Chilean voters want new constitution - partial count

Chileans have voted overwhelmingly for the countrys Pinochet-era constitution to be redrafted, with more than a third of votes counted from around the nation and abroad, the electoral service said on Sunday evening. A total of 77.71 had app...

Colombia kills top ELN commander in military operation

Colombian security forces have killed a top National Liberation Army ELN rebel commander known best by his nom de guerre Uriel, during an operation in the coastal Pacific province of Choco, President Ivan Duque said on Sunday. Uriel, known ...

Give Feedback