Ind-Ra revises downward perspective of the steel sector

New Delhi, September 4 () India Ratings and Research (Ind-Ra) said Wednesday that it has revised its outlook on the steel sector to 'stable to negative' due to expectations of a lukewarm demand in the steel sector.

In view of the slowdown in global growth and continued trade friction, the rating agency has revised the growth prospects for the demand for downward steel for the current fiscal.

Ind-Ra has revised downward its expectations for growth in demand for fiscal steel 2019-20 to around 4 percent from the previous forecast of 7 percent.

Ind-Ra has revised its perspective on the steel sector ... for the rest of the 2019-20 fiscal year due to the slow expectations of steel demand growth due to the combination of structural and cyclical concerns in the user sectors In the end, mainly the construction of cars and real estate, the rating agency said in a statement.

The perspective also takes into account the increase in import risks, especially from the free trade agreement countries, including Japan and South Korea, due to the adverse impact of the dominoes of the global growth slowdown and continued trade frictions.

In addition, the availability of raw materials and price risks may increase in the fourth quarter of the current fiscal year if uncertainty about iron ore mine auctions continues, he said.

Steel sales volumes and margins are expected to weaken further in the second quarter of 2019-20 after the industry has witnessed the margin correction in the fourth quarter of 2018-19 and the first quarter of the fiscal year 20, said Ind-Ra.

Steel prices have been continuously softened, while commodity prices have only experienced a partial decline, thus reducing gross margins for steel producers. However, Ind-Ra said it expects the demand for steel to recover in the second half of 2019-20, backed by the rebound in government investments, fiscal stimulus measures and improved market sentiment. SID SHW SHW