|
|
India Metals Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: July 2009 Product Code: R302-7061 Description India’s buoyant domestic metals market coupled with its insulation from the global economic downturnhas ensured that the country’s metals industry continues to grow while other emerging markets shrink,with BMI’s latest India Metals Report forecasting 4.4% growth in crude steel output in 2009. Despite theoptimism, BMI notes growing concerns over the impact of the debt crisis as well as ongoing landdisputes on planned steel and aluminium plants as well as the threat of dumping from China and theCommonwealth of Independent States (CIS).The World Steel Association reported a 3.0% decline in crude steel output in the first four months of 2009to 17.99mn tonnes, but its figures also show an 8.1% rise in output to 4.58mn tonnes in April alonesuggesting a rebound from the monthly low of 4.1mn tonnes in February. According to PTI’s reports,imports rose 6% year-on-year (y-o-y) in March-April to 1.57mn tonnes while exports fell 40% y-o-y to400,000 tonnes as the domestic market absorbed the bulk of output. Of total imports, hot rolled coilsrepresented a 28% share or 500,000 tonnes. In FY08/09, Indian exports fell by 27% while imports fell by17% to 6mn tonnes. The market has been stimulated by the government’s fiscal boost, which has been directed at 37 majorinfrastructure projects. The stimulus programme is aimed at GDP growth of 7.0-7.5% in H1 FY09/10. The government has permitted the India Infrastructure Finance Company Limited (IIFCL) to raiseINR400bn (US$7.8bn) in bonds to refinance infrastructure-related public-private partnerships, a movethat will boost construction and steel demand. The automotive sector is also recovering strongly, withdouble-digit growth rates in Q209. While it is unlikely that growth will be sustained at these levelsthroughout 2009, analysts see the upturn as a sign that the car market has already passed its low-point.The Indian market has been insulated from the global downturn as it has less exposure to the global steeltrade and good internal demand. The World Steel Association has forecast steel demand growth of 2% inFY09/10; an excellent performance compared to other emerging markets which are expected to contract. Pramod Kumar Rastogi, the Secretary of the Ministry of Steel, is even more optimistic, suggesting growthof 5-10%. BMI is less sanguine, with the market likely to be volatile, although recent results haveprompted us to revise our forecast upwards from a negative output growth rate of 1.4% to positive growthof 4.4%, to 57.48mn tonnes in the 2009 calendar year. The danger of over-capacity will linger, posing athreat to prices and in turn profitability especially if coal prices do not remain low. This will be counterbalancedby lower prices for both iron ore and coking coal, but will not offset the full fall in the value ofsales and product price volatility. In the aluminium sector, there remains a significant danger of mediumtermover-capacity due to projects pursued by the three major players, Hindalco, Vedanta Resourcesand Nalco. Nevertheless, aluminium producers are currently still able to report a profit margin. India’s steel production by FY10/11 could reach 80-85mn tonnes, according to SAIL, up from around60mn tonnes expected in FY08/09, as a result of domestic demand. Following BMI’s revision inforecasts, we believe that output in the 2011 calendar year will reach 82.8mn tonnes, up from 78.2mntonnes. By 2013, our forecasts indicate that output will reach 96.8mn tonnes, although this will partlydepend on approvals and commissioning of steel plants. This would represent a rise in output of 76% overthe five-year period. Table of Contents
|
|
||||||||
MindBranch has been the leading provider of industry and investment research from more than 550 independent research firms since 1992. With over 90,000 market research reports, MindBranch is your trusted source of competitive business intelligence. |