Ratings agency -- Icra has upgraded its outlook for the Indian steel sector to stable from negative on the back of improving demand and prices. It said the domestic steel sector has witnessed a strong revival in second quarter of 2020-21. This is result of a combination of factors like a strong retail demand emanating from a thriving rural economy, and green shoots of recovery in white goods and the automobile sector, especially from tractors, passenger vehicles and two-wheelers.
It mentioned the momentum has strengthened further in December quarter. The cumulative domestic steel demand in October-November has already surpassed the pre-COVID-19 levels. Consequently, Icra is revising its 2020-21 steel demand forecast to a contraction of around 12 per cent, compared to initial forecast of 23 per cent contraction made in April 2020.
Besides, on production, Icra said the share of top six steel producers in total crude steel production, which remained at about 55 per cent historically, has also risen to about 65 per cent in recent months. It further said domestic hot-rolled coil (HRC) prices have been revised upwards multiple times in recent months and are ruling at a multi-year high level of Rs 49,000 a tonne. It said the price hikes have been supported by improving demand from the automobile and white goods sectors, rising international prices and a cost push in the form of higher domestic iron ore prices.
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