ICRA Finds First Signs of Revival in India's Steel Sector

Credit Rating Agency ICRA Limited announced that it found the first signs of recovery in India's steel sector early in the second quarter of this fiscal year.

Steel production and demand in the country have been heavily impacted by the outbreak of the coronavirus pandemic and the nationwide isolation measures announced by the government to contain the spread of the disease, they said. This led to an increase in steel inventories. As a result, steel producers were forced to operate at reduced capacities. Lower demand in the domestic market has also led to an increase in exports, especially to China.

The report notes that easing travel restrictions and a gradual improvement in domestic demand have led to a recovery in the sector. Steel makers, especially blast furnace makers, are likely to see a healthy recovery, fueled by rising steel prices and rising capacity utilization. It should be noted that by the end of the second quarter of fiscal year 21, capacity utilization in the steel industry in India exceeded 77%.

“There has been a marked improvement in the operating environment, as evidenced by the steady increase in capacity utilization at steel mills from lows of 27% in April this year to 78% in August 2020,” said Jayantha Roy, senior vice president. -President and Team Leader, Corporate Sector Ratings-ICRA.