Rating agency Icra said in its report that sharp depreciation in the rupee is likely to help the India’s domestic steel industry lower imports and boost exports in the coming months, which in turn may improve India’s overall steel trade balance. The report also said “The weaker rupee is also likely to translate to higher landed cost of steel imports, which in turn should support domestic prices. In addition, higher absorption of steel in the domestic market kept steel exports low, despite remunerative international prices. While the consumption levels are likely to ease in a seasonally weak second quarter, the agency said government’s continued thrust on infrastructure spends and expected improvement in rural demand on the back of higher minimum support prices (MSPs) is expected to drive the steel consumption growth momentum in the coming months.”
Icra noted that in the first quarter of FY19, steel exports dropped by over 33 percent, whereas imports grew by over 11 percent, and consequently the country turned a net steel importer, after having been a net exporter for the last two years.
Icra said “Domestic steel consumption grew at a healthy pace of 9.2% YoY in June quarter, compared with 7.9% in FY18, driven by strong automobile sales growth and further uptick in demand for longs by the construction sector before the onset of the monsoon. The country’s finished steel production growth also improved to 5.3% YoY in June quarter, from 3.1% in FY18, according to the report.
Source : PTI
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