Steel Industry Set To Report Record Sales Growth In Q4
Strong domestic demand, along with healthy exports, aided the steel industry’s production and sales growth in the fourth quarter of 2020-21 on a sequential basis, said analysts.Revenues of steel companies are expected to impr
Strong domestic demand, along with healthy exports, aided the steel industry’s production and sales growth in the fourth quarter of 2020-21 on a sequential basis, said analysts.Revenues of steel companies are expected to improve 20% quarter-on-quarter and 45-50% from a year ago on higher realization and rising demand, led by a recovery in capital expenditure of states, auto production, white goods production and real estate construction. “Steel companies are expected to post a whopping 45-50% y-o-y increase in revenue, led by rising realizations (27% y-o-y increase) and healthy demand in the fourth quarter of fiscal 2021 on the low base of last year (sales and production by steelmakers were impacted in the last two weeks of March 2020 due to the lockdown)," said Crisil Research in a report on 8 April.The top five steel manufacturers—Tata Steel, JSW Steel, Steel Authority of India Ltd (SAIL), Jindal Steel & Power Ltd and AM/NS India (formerly Essar Steel)—account for about 55% of India’s installed capacity.Domestic prices of flat steel are estimated to have increased 32% in the fourth quarter from the year-ago period and are expected to remain elevated over the coming months.“Steel prices in the world are at an all-time unprecedented high due to steep increase in the prices of iron ore as well as due to the strong growth in steel demand from China, India, US, Europe and other emerging markets, as global markets recover from a year-long slowdown with the reopening of business activities and vaccination drive," according to a report by Care Ratings on 30 March.However, while the upward movement in steel prices brings relief to domestic steel companies, it has spooked end-user sectors that are wary of the steep increase in raw material costs.Besides, increase in steel prices also raises the fear of inflation in the domestic markets as rising raw material costs across sectors has a cascading effect on consumer spending.