FY19 to challenge domestic steel industry

FY19 to challenge domestic steel industry
06/06/2018 , by , in ALLIED

The IIP indices for manufacturing and industry (both rising at 4.4% rate over last year in FY18) have been significantly buoyant. The same upbeat resilience is also observed in the macro economic data released recently by CSO on GVA and GDP estimates for the country for Q4 of FY18 and for the full year as well. During January-March quarter, GDP growth at 7.7% (over and above 7% growth in Q3) had pulled up the average rise of GDP to 6.7% in FY18, the highest in the global scale. The trend of a few other indicators in Q4 having large impact on movement of downstream industrial products needs special mention.

The GVA in manufacturing and construction rose by 9.1% and 11.5%, respectively in the last 3 months of FY18. This is against 6.1% and (-)3.9% growth in these two elements in the corresponding period of the previous year.

Both the US and the EU are expected to raise interest rates in the following months and flight of capital (FII) to some extent from India cannot be entirely ruled out. A 7.9% growth in steel consumption in the country much ahead of GDP growth in FY18 establishes the premise that in a rising economy steel demand growth is ahead of GDP growth rate.

During FY19 the settlement of NCLT referred cases of Bhushan Steel, Monnet Ispat, Electrosteel Castings and Essar Steel should make additional 11-12 million tonne of steel readily available. Each of these steel plants is capable of adding another 15-17 million tonne of steel available in the next years.

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