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SAIL cuts domestic steel demand outlook for FY12

24 Nov 2011 Evaluate

India's steel demand is likely to grow by 6% in the current fiscal, nearly half the earlier forecast, as higher interest rates squeeze demand from the automobile and construction sector. Maintaining the prior forecast of 10 to 12% growth in consumption for the year ending in March is difficult in the current environment. Car sales in India fell 23.8% in October, the biggest percentage drop since December 2000,hurt by a series of interest rate increases by the central bank and high vehicle costs. The sluggish demand will keep steel prices under pressure. Earlier this month, the state-run steelmaker blamed a halving of quarterly profit on rising costs and a strong dollar.

SAIL imports 75% of its coking coal requirements, with a significant portion coming from Australia. The company's coking coal requirements are likely to rise to 21 million tonne in 2013 from 13.8 million tonne in 2010. India holds 10% of the world's coal reserves but local supplies are falling short of demand as the country builds more power plants, and as domestic projects run into environmental and land acquisition delays. The recent fall in input costs has been nullified by depreciation in the Indian rupee. The rupee skidded to an all-time low on Tuesday and slumped 16.8% from its 2011 high reached in late July.The company aims to expand its crude steel production capacity to 40 million tonne by 2020 from the existing 12.84 million tonne. Iron ore requirements are likely to rise to 39 million tonne in 2013 from 23.25 million tonne in 2010. SAIL is also the country's second-largest iron ore producer, and had produced 24.2 million tonne of the steel-making raw material in 2010-11.

SAIL Share Price

166.55 -1.35 (-0.80%)
15-Apr-2026 11:44 View Price Chart
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