1. Home >
  2. Export Import News >
  3. Export Benefits >
  4. Steel players’ operating profit to decline 20-30% in FY21: India Ratings >
  5. Steel players’ operating profit to decline 20-30% in FY21: India Ratings

Online Export Import Data Search

Recent Searches: No Recent Searches
Complete Training Video : Click Here

Steel players’ operating profit to decline 20-30% in FY21: India Ratings.

Date: 03-06-2020
Subject: Steel players’ operating profit to decline 20-30% in FY21: India Ratings
As construction activities were impacted due to the extended lockdown, onset of monsoon and mass migration of labourers, operating profit or EBITDA of steel producers is expected to decline by 20-30 per cent in the current fiscal due to lower demand and price realisation, India Ratings (IndRa) has said.

The agency has already predicted a 10-15 per cent reduction in steel demand for the current fiscal, mainly due to the slowdown in economy, decline in auto sector and the impact of COVID-19 pandemic on construction activities.

“The top-line of steel players is expected to bottom out over the first half of the fiscal due to the lockdown in the entire first quarter and the seasonally weak second quarter.

“With certain levels of normalcy and complete recovery expected only over the second half of FY2022, credit metrics of steel players are likely to weaken with EBITDA declining 20-30 per cent YoY in FY2021,” the agency said.

To compensate for the low domestic demand, steel players are looking to cater to export markets, especially those which have been earlier catered by China, Japan and Russia, as lower iron ore price has improved the price competitiveness of Indian products.

On the imports side, the anti-dumping duty is likely to protect local players from Chinese imports, while imports from free trade zones could pressure domestic prices moderately, it noted.

“However, for the next 6-12 months, players may grapple with longer inventory and debtors periods, due to which maintaining liquidity is of prime importance,” the agency said.

“While most large players have refinanced or secured tie-ups for capex, medium and secondary steel producers could face liquidity stress over FY21 due to the incremental working capital requirement,” it added.

IndRa also expects steel prices to correct over the fiscal, with an inventory building up, especially of intermediate steel products, with downstream facilities of most primary steel producers being shut during the lockdown.

“However, there could be certain temporary periods when prices may receive support due to lower production levels limiting supply as the economic activity resumes. Steel players will find some respite though from subdued raw material prices (both iron ore and coking coal),” it said.

However, iron ore prices may gradually increase as Odisha iron ore mines gradually ramp up, given the high auction premiums upon acquisition by new lessee.

“The flat products segment, which was already facing headwinds prior to the lockdown, is likely to be more impacted than the long products segment, led by the weak demand conditions in the end-use industries such as automobiles, capital goods and white goods, due to consumers delaying discretionary expenses,” it said.

Furthermore, with the majority of the capital expenditure over FY19-FY23 being in the flat products segment, the supply surplus is likely to ensure a prolonged recovery in flat products prices.

“Conversely, the long products segment could see a better demand as accelerated government spending on infrastructure would provide an impetus to the end-use industries.

“However, key issues such as supply chain disruptions and labour unavailability need to be addressed to revive the steel sector. Labour retention policies of each state would be critical to ensure minimum disruption of manpower availability,” the agency said.

Source:- financialexpress.com

Get Sample Now

Which service(s) are you interested in?
 Export Data
 Import Data
 Exim Help

What is New?

Date: 25-08-2020

Date: 06-07-2020
Notification No. 29/2020-Customs
Seeks to further amend notification no. 152/2009 dated 31.12.2009, to increase the rate of duty of customs on imports of Phthalic Anhydride originating in Korea RP and imported under the India-Korea Comprehensive Economic Partnership Agreement, on recommendation of preliminary findings of Directorate General of Trade Remedies under India-Korea Comprehensive Economic Partnership Agreement (Bilateral Safeguard Measures) Rules, 2017.

Date: 02-07-2020
Notification No. 55/2020 - Customs (N.T.)
Exchange Rates Notification No.55/2020-Custom (NT) dated 02.07.2020.

Date: 01-07-2020
Notification No. 58/2020 – Central Tax
Seeks to make eighth amendment (2020) to CGST Rules

Date: 30-06-2020
Notification No. 54/2020-CUSTOMS (N.T.)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver- Reg.

Date: 30-06-2020
Circular No.31/2020-Customs
Extension of validity of AEO certification for ease of renewal process (Modification in Circular No. 27/2020 dated 02.06.2020) [Circular No. 31/2020 - Customs dated 30.06.2020].

Date: 30-06-2020
Notification No. 57/2020 – Central Tax
Seeks to amend notification no. 52/2020-Central Tax in order to provide conditional waiver of lat fees for the period from July, 2017 to July, 2020.

Date: 30-06-2020
PUBLIC NOTICE No. 11/2015-2020
Extension of validity of Recognition of Pre-shipment Inspection Agencies (PSIAs

Date: 29-06-2020
Trade Notice No. 17/2020-2021
Procedure and Criteria for submission and approval of applications for export of PPE Medical Coveralls for COVID-19

Date: 27-06-2020
Notification No. 55/2020 – Central Tax
Seeks to amend notification no. 35/2020-Central Tax in order to extend due date of compliance which falls during the period from "20.03.2020 to 30.08.2020" till 31.08.2020.

Exim Guru Copyright © 1999-2020 Exim Guru. All Rights Reserved.
The information presented on the site is believed to be accurate. However, InfodriveIndia takes no legal responsibilities for the validity of the information.
Please read our Terms of Use and Privacy Policy before you use this Export Import Data Directory.


C/o InfodriveIndia Pvt Ltd
F-19, Pocket F, Okhla Phase-I
Okhla Industrial Area
New Delhi - 110020, India
Phone : 011 - 40703001