The report highlights the demand-supply scenario, price trends, imports/exports in both India and China, encompassing finished steel products (both flat and long), scrap, iron ore, coking coal and others, while also evaluating at the impact of end-user industries on India’s steel sector.
While industry players have been experiencing tighter liquidity levels, as a result, earnings before interest, tax, depreciation and amortisation (EBITDA) levels are likely to improve by Rs 1,500 per tonne during Q3FY20 as compared to H1FY20 levels due to a marginal increase in realisations and decline in raw material prices, the report said. In H1FY20, EBITDA per tonne was lower by Rs 2,500-Rs 3,000/ tonne as compared to the average levels in FY19. In mid-November, steel prices increased by around Rs 500-Rs 700/ tonne on a month-on-month basis in anticipation of growth in demand over the remaining portion of H2FY20 compared to H1FY20, though it is unlikely to increase to the levels witnessed in FY19. Demand for steel long products shall partially improve from November 2019 onwards, with construction and infrastructure activities likely to pick up post the completion of the monsoon season, the Ind-Ra sector report stated.
Prices of iron ore from the largest domestic miner, NMDC (Fines: Fe 64 per cent) reduced by Rs 500/tonne in mid-November 2019 as compared to July 2019. NMDC, cut prices by Rs 200/tonne per month in August and September 2019 and by a further Rs 100/tonne in November 2019. Coking coal prices remained highly volatile over July-November 2019, with prices being 33 per cent lower in mid-November 2019 as compared to April 2019. Ind-Ra said the fall in prices can be ‘largely attributed to low restocking needs in China amid negative market sentiments and improved coking coal supplies.’ On the domestic front, Coal India Limited (CIL) has stated that it shall focus on obtaining advance agreements for coking coal imports as against its previous plan of acquiring coking coal assets.
The report said a key development within the sector is the Indian government’s decision to pull out of the Regional Comprehensive Economic Partnership (RCEP), since the anti-dumping duty that protects the domestic market from Chinese imports would have become null and void if India had entered into RCEP. The other main steel exporting nations within RCEP are Japan and South Korea, with whom India already has Free Trade Agreements (FTA).
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1 Comment on this Story
Ramesh Shah322 days ago
But obviously..... the BUSINESSES cycles slowing down rapidly the burnt has to Bourne by all..... the PM S opinion naa chalunga naa chalne Doonga.....