Amid healthy global and domestic demand growth along with ongoing capacity rationalisations in China, the credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has revised the steel sector outlook to stable for the next financial year (FY19) from negative in the current fiscal year (FY18). It added that improvement in demand-Supply balance is expected to enhance operational and financial performance of steel industry.
The rating agency also revised outlook on rated steel entities to stable for FY19 from negative in FY18, on the back of higher cash flow generation and balance sheet deleveraging. Besides, it is expecting consolidation in the steel sector during FY19, but some of the stressed assets may take 12-18 months to ramp-up utilisation to optimum levels.
Ind-Ra is also expecting steadiness in import-export levels and added that a turnaround in stressed assets along with capacity addition could meet the incremental demand. However, the report expressed worries over the increasing global trade protectionism, as it is risk factor for export and may also put some pressure on the domestic capacity utilization.
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