Strong domestic demand, followed by healthy exports have aided India’s steel industry’s production and sales growth in the fourth quarter of 2020-21 on a sequential basis, say analysts. Revenues of steel companies are expected to improve 20 per cent quarter-on-quarter and 45-50 per cent from a year ago on higher realization and rising demand, led by a recovery in capital expenditure of states, auto production, white goods production and real estate construction.
“Steel companies are expected to post a whopping 45-50 per cent y-o-y increase in revenue, led by rising realizations (27 per cent y-o-y increase) and healthy demand in the fourth quarter of fiscal 2021 on the low base of last year (sales and production by steelmakers were impacted in the last two weeks of March 2020 due to the lockdown),” said a CRISIL Research report.
The top five steel manufacturers—Tata Steel, JSW Steel, Steel Authority of India Ltd (SAIL), Jindal Steel & Power Ltd and AM/NS India (formerly Essar Steel)—account for about 55 per cent of India’s installed capacity.
Domestic prices of flat steel are estimated to have increased 32 per cent in the fourth quarter from the year-ago period and are expected to remain elevated over the coming months. “Steel prices in the world are at an all-time unprecedented high due to steep increase in the prices of iron ore as well as due to the strong growth in steel demand from China, India, US, Europe and other emerging markets, as global markets recover from a year-long slowdown with the reopening of business activities and vaccination drive,” according to a report by Care Ratings.
Hot rolled coil (HRC) prices are expected to rise by at least Rs 3,500- Rs 4,000 per tonne in April 2021. A Rs 4,000 a tonne hike will take domestic HRC prices to Rs 59,000- Rs 60,000 per tonne—the highest since 2008.
Firm international steel and iron ore prices, along with strong demand from China, US and Europe are driving international steel prices, and have prompted domestic steel makers to raise prices since the second half of FY21.