India’s steel demand is forecast to grow at around 4pc rather than 7pc predicted earlier by India Rating (Ind-Ra). The agency revised its steel sector outlook from stable to negative till the March quarter amid sluggish steel demand growth. Raw material availability and price risks could increase in the current quarter, if uncertainties around iron ore mine expiries in India continue.
The rating agency believes that limited capacity additions will help balance the demand-supply situation amid sluggish demand in second half of FY20. Domestic steel sector faces increased import risks from Free Trade Agreement (FTA) countries such as Japan and South Korea as global growth slows and trade frictions continue, according to Ind-Ra.
Adequate government support through regulatory policy to boost steel demand and improved capacity utilisation is essential for the sector. Indian government has imposed an anti-dumping duty against cheap imports, but it also needs to address issues such as availability of land and fast tracking of approval for setting up of plants.