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    Steel consumption growth to be lower in FY17: ICRA ; exports on rise

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    steel consumption growth

    New Delhi: In F17 there is a current projection that the steel consumption growth will be lower than the previous fiscal year. The reason cited mainly is because the real estate and construction sectors are lagging behind, rating agency ICRA said yesterday.

    ICRA’s credit ratings are symbolic representations of its current opinion on the relative credit risks associated with the rated debt obligations/issues. These ratings are assigned on an Indian (that is, national or local) credit rating scale for Rupee (local currency) denominated debt obligations. ICRA ratings may be understood as relative rankings of credit risk within India. ICRA ratings are not designed to enable any rating comparison among instruments across countries; rather these address the relative credit risks within India. It concluded in a report that sluggish demand in recent months led to a reduction of Rs 2,000/T in domestic Hot Rolled Coil (HRC) prices in February 2017.

    Though domestic HRC prices have seen an upward revision  in March 2017 by Rs 1,000/T, and reportedly a further price increase is being considered by the industry in April, uncertainty remains on the increase of this sustainability, given that domestic prices are now costlier than landed cost of imports, ICRA said in the report.

    Nevertheless, in the medium term the governments thrust on infrastructure and affordable housing sectors in the Union Budget 2017-18 points to a favorable demand outlook for the steel sector.

    India’s steel imports contracted by 38.5 per cent in 11M FY17 on the back of various trade protection measures including anti-dumping duty, safeguard duty and minimum import price.

    Jayanta Roy, Senior VP and Group Head – Corporate Ratings, ICRA said that the decline in steel imports has coincided with a strong growth in steel exports by domestic mills, supported by an improvement in the pricing scenario in international markets.Roy said that the rising exports augur well for Indias pellet capacity of around 90.6 million tonne per annum, which has been operating at suboptimal utilization levels of around 50% thus far.

    From mid-November 2016, with the Chinese government partially removing supply restrictions on coal mining, there has been an increase in the Chinese coal production gradually in the December quarter; ICRA said adding that in CY2017 this is expected to lower China’s import dependence of coking.

    He further added that as against a wide gap in FY16 of 7.6 million tonne between India’s steel exports and imports, as a result exports have surpassed imports in 11M FY17 by a thin margin, in the current year India has now become a net exporter of steel. It Registered a growth of 23 per cent over FY16 and  ICRA expects domestic iron ore production to reach 190 million tons in FY17.

    Odisha, where production is expected to cross 100 MT in FY2017 has produced a bulk of the incremental domestic production.  However, buoyant international iron ore prices have been of great help to arrest the slide in domestic ore prices, especially in the  states where prices were under pressure earlier due to oversupply like in the states of Chhattisgarh and Odisha,.

    News Source: indiatoday.intoday.in

    Picture Source: google.co.in

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