Fundamentals for the steel sector are likely to weaken in FY20 under the twin impact of softer prices and higher input costs on the back of low demand. Domestic steel companies will be impacted by muted demand from auto sector, even though government projects in affordable housing and infrastructure are expected to improve the demand scenario, India Ratings and Research (Ind-Ra) has said in its latest sector report. Supply of coking coal is likely to be tight in the coming months, the report said with large Australian miners reducing their output. However, with India, the largest coking coal importer from Australia, maintaining its monthly import levels, the agency expects coking coal prices to remain firm in near to medium term. However, Ind-Ra expects a bearish trend to prevail in iron ore prices in the coming months. While ore prices rose 48% year on year to US$ 135/tonne in July 2019, as global ore major Vale of Brazil cut its production due to a dam collapse in January 2019, supply showed signs of recovery in July 2019. In China mills reluctant to increase iron ore inventories due to lower demand could also rein-in prices.

(Economic Times)