International awards to help steelmakers overcome second wave of Covid: ICRA
New Delhi, June 12 (IANS) Favorable international prices should help domestic steelmakers weather the second wave of Covid, rating agency ICRA said.
In addition, ICRA expects domestic demand to pick up in the coming months with the gradual lifting of bottlenecks and mobility restrictions in India in June 2021 and improved vaccination coverage.
This trend will in turn lead to increased levels of capacity utilization, the agency said.
“Domestic steel prices are currently negotiating at a significant discount to the landed cost of export offers from China,” said Jayanta Roy, senior vice president and group leader, Industry Assessments. company, ICRA.
Even in the midst of the second wave disrupting economic activity, the sharp rise in international steel prices gave domestic steelmakers the leeway to proceed with successive price increases, reaching a 20% increase since the start of the exercise. “
According to the rating agency, the second wave of the pandemic has hit domestic demand for steel in the current year, with a 22% drop in MoM in April 2021 and a further sequential drop of 1% reported. in May 2021.
However, current year’s consumption data looks much better compared to last year due to the much stricter lockdowns seen between April and May 2020.
“Despite weak domestic demand, sustained international demand and steel prices supported domestic steelmakers and India remained a net exporter of steel with 122% year-on-year export growth reported in April 2021. “
“Although exports in April 2021 were 26% lower than March 2021 levels, export momentum continued into May 2021 with 30% growth in MoM.”
Currently, India faces an iron ore shortage in the main commodity-producing state of Odisha, with many merchant mines auctioned off yet to reach their previous production levels.
“This has caused the domestic iron ore prices to rise to record levels at present. With the prices of iron ore transported by sea also remaining high, exports have become remunerative for miners, even for grades. higher which entail a duty of 30 per cent. “
“Therefore, CIFAR expects the national iron ore shortage to persist over the next 6-9 months, resulting in prices that remain elevated for much of fiscal 2022.”
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