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ICRA sees massive surge in steel industry capital expenditure

Steel News - Published on Mon, 28 Jan 2019

Image Source: Moneycontrol
The recent forecast by ratings agency ICRA said that domestic steelmakers in India are likely to pump in INR 75,000 crore to INR 80,000 crore in capital expenditure between fiscal year 2019 and fiscal year 2021. The agency foresees ramp up of steel capacities in the country by at least 16 million tonnes during this period. According to ICRA report, the absolute earnings by the domestic steel industry are likely to remain flat in FY 20 as compared with the prior fiscal. Although mill margins are likely to weaken, this will be more or less balanced with rise in shipment volumes, on account of huge rise in domestic steel demand. This in turn will help the steel sector companies to maintain their credit profile, the report said.

During this fiscal, domestic steel production is expected to witness subdued growth of 2.5-3%. The projected rise in cheap imports of steel from other countries coupled with decline in export volumes on account of escalating global trade barriers are cited as the main reasons for the subdued growth in domestic steel production in the country. In FY20, domestic steel production is likely to register a growth of 5-5.6%. Meantime, export volumes will stabilize at lower levels. Also, international steel prices are likely to moderate on the back of projected flat demand growth in China.

Steel production in India was up by 3.1% to 103 million tonnes in FY 2017-’18, whereas consumption surged higher by almost 8% to total 90.7 million tonnes.

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Posted By : Joykumar Irom on Mon, 28 Jan 2019
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