KOLKATA: A pick up in domestic steel demand paired with sustained buoyancy in the auto sector and a recovery in construction and capital goods alongwith consolidation in the sector as part of the insolvency resolution of stressed steel assets is tipped to favour production growth in steel sector, according to ratings agency, ICRA Steel demand growth has improved to 5.2% in nine month period of FY2018 as against 4.5% in seven months of FY2018, aided by a healthy growth rate of 6.2% reported in the month of December 2017. Going forward, ICRA said it expects the domestic consumption growth to remain favourable on the back of the Government’s thrust on infrastructure, in particular towards affordable housing, power transmission and the Railways in the Union Budget 2018-19. In the current quarter, blended coking coal price is expected to be sequentially higher by around US$ 25/tonne. At present, top three domestic steel producers account for around 40% of India’s annual crude steel production, and given the initial readings in the resolution process thus far, the domestic steel industry is heading towards further consolidation in the near to medium term. “This augers well for the industry, given that these large capacities have been operating at sub-optimal utilisation levels thus far,” the ICRA report added.

Source: Economic Times February 28, 2018 11:48 UTC