Domestic demand for finished steel to grow 8% this year, says rating agency Icra

The demand for finished steel in India is expected to grow eight per cent this year compared to 2021, according to rating agency Icra.

Supported by the government's infrastructure-led growth model, domestic finished steel demand has registered a double-digit growth of 11.9 per cent in the first eight months of the current fiscal, the ratings agency said in a report on Wednesday.

The demand is "poised to close the year with a growth of 8 per cent...7-8 per cent growth for FY 2022-23," Icra said.

However, domestic steel companies "face a bumpier road ahead" as the external environment becomes more challenging due to elevated inflation/ energy prices and rising interest rates. Given the expectation of a slowdown in the pace of economic activity over the next few quarters, domestic steel demand growth is likely to moderate to 6-7 per cent in FY24, Icra said.

Jayanta Roy, Senior Vice-President & Group Head - Corporate Sector Ratings at ICRA, said dependence on external financing to meet committed expansion plans is likely to increase going forward.

A gradual increase in the steel industry's borrowing levels has already been noticed during the first half of ongoing FY23, he said.