In the December edition of Ratings Analytica, Argha Chanda, Director at CRISIL Ratings, dives into the outlook for secondary long-steel makers, with revenues expected to rise by ~7% this fiscal.
This growth is primarily driven by strong domestic demand, fueled by the government's infrastructure projects, and the sector's improved operational efficiencies.
Argha will share his expert insights into how these factors are shaping the industry’s performance and what lies ahead for steel producers.
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Hallo und Willkommen zu Br��ssel Sport. On secondary steel sector. This segment of the industry is expected to witness revenue growth of around 7% in fiscal 25, riding on robust domestic demand fueled by central governments spending on housing and infrastructure projects. This fiscal, the central government spending on rural and urban housing and infrastructure projects, particularly under Pradhan Mantri Awas Yojana and the National Infrastructure Pipeline will sustain domestic demand. As a result, volumes will grow by around 7 to 8% on a high base of last fiscal, which was a pre election year when it spurted to around 14%. The uptick that we have seen in the first half of the fiscal will be more pronounced in the second-half. Now coming to the realizations, the average realization will remain steady at around 53,000 to 54,000 per tonne this fiscal on account of stable supply given limited capacity expansions that we have seen in the last few years. Steady realization and increased volume will propel revenue of secondary long steel producers in fiscal 25. Owing to higher volumes, the sectors capacity utilization will rise to around 83% this fiscal as compared to 80% last fiscal. Recently improved operating leverage combined with declining prices of key inputs such as iron ore and coal will drive Epitaph Patton to around 4000 this fiscal from 3700. Last fiscal, leading to higher cash generation, improved cash generation and deleveraged balance sheets will continue to provide sufficient headroom to support rising CapEx of the secondary steel manufacturers, thereby keeping their credit profiles comfortable. Going forward. Government spending on infrastructure and prices of primary raw materials will bear watching. With this, we come to the end of the podcast. Thank you for listening in and stay tuned.
