Mumbai, Sep 4 (IANS) India Ratings and Research (Ind-Ra) on Wednesday revised down its outlook on the Indian steel sector from 'stable' to 'stable-to-negative' for the remainder of FY20 owing to sluggish demand growth expectations.
It further revised downwards its FY20 steel demand growth expectations to around 4 per cent from the previous forecast of 7 per cent.
The move factored in the mix of structural and cyclical concerns primarily in the auto and real estate sectors and the increased import risks, especially from Free Trade Agreement (FTA) countries such as Japan and South Korea owing to trade tensions and slowing global growth.
Furthermore, raw material availability and price risks may escalate in Q4 FY20 if the uncertainty over iron ore mine auctions prolongs, it added.
"Ind-Ra expects overall steel sales volumes and margins to weaken further in Q2 FY20 after the industry witnessed margin correction in Q4 FY19 and Q1 FY20," Ind-Ra stressed.
However, it also said that steel demand may recover in 2HFY20, supported by pick up in government investments, fiscal stimulus measures, improvement in market sentiment and 2HFY19's lower base.
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