Global steel demand is expected to recover in the second half of the year

Steel demand is likely to rebound in the second half of this fiscal year on the back of expected growth in the infrastructure sector, according to the Icra report.

She noted that the decline in demand and the reduction in steel exports contributed to the low growth in steel production at 3.3 percent in 2018-1919.

“Growth in domestic steel consumption slowed to 7.5 percent in 2018-19, from 7.9 percent in the previous fiscal year, due to liquidity and fuel price counter-meetings faced by the automotive sector in the second half.” , - the report says.

Steel imports increased 4.7 percent in 2018-19 and imports are expected to decline this year in the coming months as domestic hot rolled steel prices are sold at a 6 percent discount to imports.

Despite expectations of a decline in imports, domestic steel production growth is likely to remain modest in the second quarter of 2019-20 due to seasonal weakness in demand and rebound in the second half of the fiscal reflection of steel consumption trends, the report said.

"Demand growth slowed to 6.4 percent in April 2019 and is likely to remain below FY19 in the first quarter (FY20) due to continued weakness in the automotive sector and contraction in construction work during the overall election period." The report says.

This, combined with higher coking coal prices, is likely to affect the financial performance of domestic steel producers in the first quarter, they added.