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SAIL halves India's FY12 steel demand outlook

23 Nov 2011 Evaluate

State-owned steelmaker, Steel Authority of India (SAIL), which is also country's second largest iron ore producer, has halved India’s steel demand projection for the current fiscal year to 6% from earlier of 10-12%. This sharp cut in forecast is due to squeezed demand from the automobile and construction sector which are currently bearing brunt of higher interest rates.

Hurt by a series of interest rate increases by the central bank and high vehicle cost, Car sales in India fell 23.8 percent in October, the biggest percentage drop since December 2000. However, the company is of the view that this sluggish demand would do some good as it expects that sluggish demand to keep steel prices under pressure. Earlier this month, the state-run steelmaker blamed a halving of quarterly profit on rising costs and 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 tonnes in 2013 from 13.8 million tonnes in 2010.

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167.90 1.80 (1.08%)
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