ICRA Limited- the leading credit rating agency announced its decision to upgrade its outlook for the Indian steel sector from negative to stable. The revision in outlook is mainly on the back of improving steel demand and price situation. It must be noted that the agency had revised its outlook to negative earlier this year.
According to ICRA, the domestic steel sector has reported significant revival during the second quarter of 2020-’21. The retail demand remained strong during this period, mainly driven by thriving rural economy. The automotive sector recovery, especially from tractors, passenger vehicles and two-wheelers has also contributed to the steel sector recovery, it added.
The combined steel demand levels in October and November have already outpaced pre-Covid-19 levels. The momentum has recorded further strength in the fiscal year third quarter too.
Jayanta Roy, Senior Vice-President & Group Head, Corporate Sector Ratings, ICRA noted that the revival in demand has been extremely surprising. The sector has shown remarkable ability to claw back to pre-Covid-19 levels within six months of the pandemic outbreak. In addition to revising its outlook to stable, the agency has also revised its steel demand contraction forecast for 2020-’21 to around 12%, compared with the earlier forecast of 23%.
