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NEW DELHI: Indian demand
remains a bright spot in major steel markets as domestic consumption is seen
growing at a “high single digit” rate over the next 12-15 months, a senior
executive at Moody’s Investors Service said on Monday.
India, the world’s second-largest crude steel
producer, posted 11.4% growth in finished steel consumption during
April-October to 65.5 million tonnes.
“India remains the bright spot because the
underlying steel demand still remains quite solid,” Kaustubh Chaubal, a senior
vice president at Moody’s, told Reuters in an interview.
“It is one of the brighter spots when we compare
with any other region, whether it is APAC, Europe or even the U.S.”
In the coming months, a major catalyst for steel
demand growth would be infrastructure investments ahead of India’s national
elections in 2024, Chaubal said.
However, most major steelmakers suffered during
July-September due to a drop in prices and a global slowdown.
Chinese demand fears haunt
copper market
India’s export tax on some steel products further
hurt profitability. The country’s finished steel exports more than halved
during the first seven months of the fiscal year that began in April.
“September results were disappointing,” Chaubal
said, adding steel prices had corrected at least 35-40% since May when the
export levy was imposed.
But, steelmakers have bolstered their balance
sheets by reducing debt and growing core earnings, he said.
Tata Steel, India’s top steelmaker which also has
operations in Europe, was “on the cusp” of an investment-grade rating, Chaubal
said. It is currently rated “Ba1 positive”.
The outlook for rival JSW Steel remained stable,
he added.
“The growing proportion of India (business), and
the declining proportion of Europe, has helped them (Tata),” Chaubal said,
adding the steelmaker had trimmed its 20 million tonne-plus capacity to 10
million tonnes in Europe.
Tata Steel, which has an annual crude steel
capacity of 34 million tonnes, missed analysts’ quarterly earnings estimates by
a wide margin as profit slumped more than 87% in the July-September quarter.