{"id":41315,"date":"2025-01-09T16:32:17","date_gmt":"2025-01-09T11:02:17","guid":{"rendered":"https:\/\/flattrade.in\/kosh\/?p=41315"},"modified":"2025-01-09T16:34:09","modified_gmt":"2025-01-09T11:04:09","slug":"domestic-steel-industry-and-its-expected-dip-in-the-capacity-utilization","status":"publish","type":"post","link":"https:\/\/flattrade.in\/kosh\/domestic-steel-industry-and-its-expected-dip-in-the-capacity-utilization\/","title":{"rendered":"Domestic Steel Industry and its Expected Dip in the Capacity Utilization"},"content":{"rendered":"\t\t
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Growth in the past<\/strong><\/span><\/p>

Post covid, the Domestic Steel industry peaked in its achievement of maintaining over 80% of capacity utilization between the years 2022 to 2024. This has been made possible because of the post-COVID surge in demand for steel and its elevated prices boosted the productivity of domestic industries.<\/span><\/p>

ICRA’s recent report <\/strong><\/span><\/p>

As per the recent report of ICRA, this report is unlikely to be sustained as the imports of steel have become cheap and it has begun to occupy the market share of domestic steel products.<\/span><\/p>

The Domestic Steel industry achieved an all-time high of 18.2 mtpa of capacity addition in the last fiscal. In the current year, 15.3 mtpa of capacity addition is in progress.
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Although the steel demand domestically maintains a solid track of 10-11 % in FY2025, domestic manufacturers are struggling to protect their market shares because of the cheaper imports. The much lower 5% growth in domestic finished steel production is only expected in the current fiscal stands as witness.<\/span><\/p>

Possible Causations for the Expected Dip
<\/strong><\/span>ICRA states that the Domestic steel industry capacity utilization is likely to drop from approximately \u00a085% in FY2024 to 78% in the current fiscal, which will be the lowest in the last four years.<\/span><\/p>

  1. Global Factors<\/strong><\/span><\/li><\/ol>

    Steel is a globally traded commodity. so, external factors and situations play a vital role in the growth of the domestic steel industry. \u00a0As amid the below-par economic growth outlook in China, and other leading steel producers and consumers, steel trade flows is now directed majorly to high-growth markets like India.<\/span><\/p>

    Further, duties imposed to protect the domestic steel industry during the meltdown of the steel metal period (2015-2016) have now expired, which paves the way for global steel producers to enter the Indian market and enable them to sell cheaper which affects the domestic industry.<\/span><\/p>

    1. Elevated Domestic prices and Imports of finished steel products<\/strong><\/span><\/li><\/ol>

      on the other hand, domestic HRC (Hot Rolled Coil) prices are trading at a premium. By the end of November 2024, domestic HRC prices were trading at a premium of US$ 12-16\/MTAs when compared to the landed costs of imports from China and Japan per ICRA.<\/span><\/p>

      Finished steel imports around about 7-7.5 % of the domestic market share in India which stands as the highest seen in the last six years. China alone accounts for about 30% of steel imports to India approximately, and around 59% of steel imports are from Japan, South Korea, and Vietnam which are all FTA (Free Trade Agreements) countries having duty-free access which also is an added advantage for them.<\/span><\/p>

      Few Reliefs Amid Challenges <\/strong><\/span><\/p>

      The few reliefs that aid the domestic steel industry are, that input costs are going to get lower in this financial year especially, hard coking coal, whose prices are likely to decline by around 24% according to ICRA \u00a0in the FY2025. In addition, the expected increase in the capex of the government to make up for the lost time in the election could restrict the pressure on the profit margin.<\/span><\/p>

      ICRA pegged the domestic steel industry’s operating profits at US$ 110-115\/MT in FY2025, which is lower than the actual operating margin of US$ 127\/MT in FY2024.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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      \n\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\tOpen Free Demat Account<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"Growth in the past Post covid, the Domestic Steel industry peaked in its achievement of maintaining over 80%…","protected":false},"author":5,"featured_media":41328,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"csco_display_header_overlay":false,"csco_singular_sidebar":"","csco_page_header_type":"","csco_page_load_nextpost":"","csco_post_video_location":[],"csco_post_video_location_hash":"","csco_post_video_url":"","csco_post_video_bg_start_time":0,"csco_post_video_bg_end_time":0,"csco_post_video_bg_volume":false,"footnotes":""},"categories":[65],"tags":[27],"class_list":{"0":"post-41315","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-industry","8":"tag-mcx","9":"cs-entry","10":"cs-video-wrap"},"yoast_head":"\nDomestic Steel Industry and its Expected Dip in the Capacity Utilization - 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