Steel industry sees signs of recovery from Q2FY21: ICRA

The rating agency ICRA mentioned the recovery of the steel industry in India. The industry is witnessing early signs of recovery in the second quarter of the fiscal year 2020. The recovery was supported by easing mobility restrictions and a steady improvement in the domestic demand environment, according to ICRA.

Talking about the performance, it motioned the performance of steel mills, particularly the blast furnace players, who are anticipating a healthy recovery in the second quarter coupled with increased capacity utilisation rates, tepid input costs, and consecutive steel prices hikes. As per ICRA, the domestic steel industry surpassed the average capacity utilisation level of 77 per cent in the months from July to September in FY21.

The rating agency believes that there is an uneven pace of recovery between the primary and secondary steel producers. The primary producers are managing to increase market share, helping them operate at higher asset utilisation rates compared to the secondary mills.

The COVID-19 pandemic, which led to the nationwide lockdown, severely impacted the production and the demand for steel in the country. It increased the inventory levels and the poor market conditions industry reduced their capacity utilisation. However, the agency said the industry’s utilisation rates saw an increase from April 2020 lows of 27 per cent to 78 per cent in August 2020, suggesting an improvement in the overall operational environment.