Steel sector to see consolidation in FY'19:Ind-Ra

The steel sector will see consolidation in 2018-19 although some stressed assets may take up to 18 months to maximise capacity utilisation, Ind-Ra said today.
A turnaround in these stressed assets along with new capacities ramp-up could meet the incremental demand, assuming import-export levels remain steady, the rating agency said in a statement.
"Nevertheless, increasing global trade protectionism could pose risk to exports and put some pressure on the domestic capacity utilisation," it added.
In view of the healthy global and domestic demand growth along with ongoing capacity rationalisations in China, the rating agency also revised the outlook on the steel sector to stable for 2018-19 from negative in 2017-18.

"The agency has also revised its outlook on rated steel entities to stable...in view of higher cash flow generation and balance sheet deleveraging, supported by healthy margins, moderate capex requirements," the statement said.
In another statement, Ind-Ra (India Ratings and Research) said it has revised the outlook for the base metals sector to stable for 2018-19 from negative in 2017-18.
"Within the sector, Ind-Ra has revised the outlook for aluminium to stable from negative and zinc to stable from positive," it said.