Global rating agency Moody's Investor Services, while maintaining a stable outlook for the Asian steel industry for now, given its expectation that steelmaker profitability will remain better in the first half of 2015, compared to the weak margins seen in the first half of 2014, has said that Steel demand in India will grow in single digit in 2015 buoyed by government's infrastructure spending.
Regionally, Moody's expects flat demand in Korea and Japan, while India will post single-digit demand growth as the new government invigorates infrastructure spending. Indian steel companies- because of import duty and/or captive iron ore supplies-will enjoy the highest profitability among the cohort. Moody's expects Japanese steel companies to benefit from the weak yen, which boosts their competitive cost structures.
Moody's has however cautioned that it could change its outlook on the Asian steel sector to negative if steel demand continues to decline over the next few months. It has said that still, sluggish domestic demand won't greatly affect supply levels, as Chinese steel companies will keep 2015 production close to 2014 levels by boosting higher-price exports, although this will pressure regional steel prices. Steel demand growth in China will be negatively affected by the slowing domestic economy and weakness in the property market, which is one of the primary end-markets for steel. The sluggish steel demand will impact steelmakers in Asia because China accounts for approximately 70% of the region's steel demand.
Start Research-backed Investing ...Now. Subscribe to Sapphire
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: