India’s steel demand will slow down due to weak demand in automobile and manufacturing sectors, but demand growth for steel will remain strongest in Asia, Moody’s Investors Service said on Tuesday.
“India’s steel demand and growth pace will slow because of weak automobile and manufacturing demand… India’s demand growth remains strongest in Asia even as growth pace slows,” the US-based agency said in its outlook report titled Asia: Steel – 2020 outlook.
India’s steel output will increase on higher capacity utilization as demand grows.
“India’s strong demand will keep imports high, but protectionist measures such as import taxes and anti-dumping duties will safeguard domestic steel producers,” it said.
The US tariffs will have a limited impact on rated producers’ sales. But the prolonged US-China trade disputes will have a spill-over impact through weaker macro conditions, the agency said. It also added that India will remain the world’s second-largest steel producer behind China after having overtaken Japan in 2018. The report talks about similar demand slowdown for steel in other countries such as China, Japan and South Korea.
Similar stance about demand slowdown and increase in raw material prices in FY 20 has been reiterated in the report of India Ratings and Research. But the report’s claims that steel imports will increase run contrast to Union Minister Dharmendra Pradhan’s answer during Question hour in Parliament that India has become a net exporter of steel in the current financial year. The Purchasing Managers’ Index (PMI) released on Monday showed that the manufacturing sector picked up in November to 51.2 last month from 50.6 in October.
(With inputs from agencies)