Integrated Steel Mills Dominance Gains Ground in India

The Indian steel industry, which suffered severe adverse effects of the drastic fall in domestic demand in the first five months, staged a surprising comeback
Integrated Steel Mills Dominance Gains Ground in India
Integrated Steel MillsWiki

The Indian steel industry, which suffered severe adverse effects of the drastic fall in domestic demand in the first five months, staged a surprising comeback in the latter part of the year. Rating agency ICRA said “Large integrated steel players are likely to see their market dominance increase this year, with both prices and volumes picking up since September and expected to hold stable till the March quarter. This would make them stand apart in a manufacturing sector that has been battered by covid-19. The share of the top six domestic steel producers in total crude steel production rose to 65% in recent months, compared to a historical average of 55%. Their capacity utilization was 85%, against a long term industry average of 78%. Smaller secondary steel producers are operating at capacity utilization rates of about 65%, indicating the rising dominance of large steel players. For integrated players, the recent performance is a far cry from April, when they were reeling under the side effects of a national lockdown. Blast furnaces were either shut or kept running without any actual production of liquid. By May, with domestic demand for steel continuing to be negligible, Indian mills started producing solely for low-margin exports, to keep the furnaces operational. With a proof of a more broad-based pickup in economic activity with every passing quarter, we believe that the recovery in domestic steel demand will sustain in the near term at least.”

The credit ratings agency revised its FY21 steel demand forecast to a contraction of around 12%, significantly better than its initial forecast of 23% in April. ICRA Senior vice president & group head corporate sector ratings Mr Jayanta Roy said “The revival in demand has been surprising, and the steel industry’s ability to claw back to the pre Covid levels of demand within six months of the pandemic has been remarkable.”

Related Stories

SteelGuru Business News
www.steelguru.com