Low prices, weak demand, volumes issues led to steel sector's muted Q2 show

Steel companies witnessed a contraction in margins, dragged down by lacklustre demand and lower global commodity prices

Lower commodity prices, fragile demand and slowing volumes throttled the performance of metal sector companies during the September quarter of this financial year.

For steel firms, heavy monsoon, liquidity issues and weakness in automobile sector led to a slump in demand. All steel companies faced sagging volumes in the quarter, but they expect a recovery in the second half or the October-March period of FY20.

The metal sector companies covered by brokerage firm Motilal Oswal in its research had to contend with a muted show in Q2. On an average, the earnings before interest, taxes, depreciation and amortisation (Ebitda) declined