Steel stocks tumble up to 5 pc on ICRA report

Steel stocks on Thursday tumbled up to 5 per cent after ratings agency ICRA said the country's steel consumption growth is likely to decelerate in 2019-20.

Shares of Steel Authority of India Limited dropped 4.64 per cent, Jindal Steel & Power 4.38 per cent, Tata Steel 3.66 per cent and JSW Steel 0.20 per cent on the BSE.

Ratings agency ICRA on Wednesday said the country's steel consumption growth is likely to decelerate to 6 per cent in the current financial year, impacted by economic slowdown.

"The domestic steel consumption growth is expected to decelerate to around 5-6 per cent in FY 2020 as compared to 7.9 per cent in FY 2019, on the back of an unprecedented slowdown in economic activity, as reflected by GDP (gross domestic product) growth tapering down to 5 per cent in Q1 FY 2020," ICRA said in a report.

It said the margin outlook for steelmakers has weakened in the second quarter due to a sharp fall in steel prices and firm raw material costs, though some recovery is expected in the third quarter of 2019-20.

The decline in steel prices and seasonally weak demand are also likely to keep second quarter financial performance muted for the domestic steelmakers, it added.