Steel Industry in India

Imposing higher tariffs on steel imports lead to restriction of trade deficit which can be considered as a good move with decline in exports, this means India still remains a net import of steel.

Demand of domestic finished steel remained healthy in July-August 2018, with increasing 6.5% over the year-ago period as given by Joint Plant Committee data. However the steel output grew by just 1%, the market was heavily supplied even if imports fell. Exports decreased considerably, since the industry appeared to be keen on domestic market. As the prices of steel remained the same the depreciation in the rupee versus US dollar would have given domestic companies the edge.

India is quite ahead at 9.5% as compared to China with a growth rate of 8.5% in Pre-engineered construction segment. Though private steel sector has done better, the decrease in steel output is the matter of concern.

As the demand of India steel grows, domestic output has to keep pace with it. Decrease in output tends to decrease volume sales growth with profitability being influenced by increase in price and product mix. Rise in interest rates with higher raw material and fuel cost impact the performance of steel companies as working capital requirement increases.

Indian steel industries appear to be in comfortable position with steel building manufacturer companies to grow at continuous rate of 33%. According to rating agency, India Rating and Research Ltd. It expects steel companies to grow by the end of FY19 with sustained profit margins.