India Ratings and Research (Ind-Ra) has announced that it has revised its outlook for the Indian steel sector to stable from negative for the financial year 2021-22.
Ind-Ra said it expects steel sales volumes in the given financial year to improve year on year and to compensate for a likely moderation in per metric ton margins. Both demand and supply are likely to be strong in the financial year 2021-22, recovering from the slowdown in the financial year 2019-20, while shipments are likely to moderate over the given financial year.
The agency expects domestic iron ore prices to gradually undergo a correction in the financial year 2021-22, as iron ore supply improves. Meanwhile, once the Odisha iron ore mines’ output ramps up, the lessees of auctioned mines are likely to pass on high premiums to customers, thus providing further support for prices.
Coking coal prices in the financial year 2021-22 are likely to be higher than the levels recorded in the previous financial year, but are unlikely to be at pre-coronavirus levels. However, the prices could remain volatile for certain months, because of the concentrated nature of the coking coal mining sector and the risk of a natural calamity in Australia.
Ind-Ra expects long products demand to increase sharply in the given financial year, supported by a demand push from the government-led infrastructure investments. Similarly, demand for flat products is likely to grow sharply in the given financial year, due to the government infrastructure investments and recovering auto demand.