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11-Sep2018

India will be brightest spot for steel sector over next 12-18 months: Moody's

With vigorous steel demand, especially from the domestic construction, infrastructure and automotive sectors, Moody's Investors Service in its latest report has said that India will be the brightest spot for the steel sector over the next 12-18 months, even as rising costs for key inputs, coking coal and iron ore, pressure profitability. The report further underlined that India's steel consumption is rising at least 5.5% to 6% every year on the back of a strong GDP growth of 7.3%-7.5% and will keep the Indian steel industry on a strong footing. India has set a target of increasing its steel making capacity to 300 million tonne by 2030-31.

Moreover, it said that India's steel sector consolidation will drive improvement in the industry's capacity utilisation levels and mute the pressure on profitability.  Besides, Moody's highlighted that the outlook for the Asian steel industry is stable, reflecting the consideration that the profitability of rated producers will increase moderately over the next 12 months against the backdrop of overall steady regional demand. 

Additionally, it pointed out Asian steel demand will remain steady over the next 12 months to June 2019, due to solid growth in 2018 will offset a likely softening in 2019. The expected softening in demand in 2019 is because China's apparent demand will likely decrease by a low-single-digit percentage, reflecting likely slowdowns in the growth of the property sector and in infrastructure investments.


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