4QFY22 Spreads For Steel Sector Could Moderate Due To Higher Coking Coal Prices

India Ratings and Research has published its January 2022 credit news digest on India's steel sector. The report highlights the demand-supply scenario, price trends, imports/exports in both India and China encompassing finished steel products (both flat and long), scrap, iron ore, coking coal and others, while also evaluating the impact of end-user industries on India's steel sector. The agency has also covered its recent rating actions.

Production improves in 2021

Ind-Ra opines India's steel production growth in 2HFY22 will be supported by strong consumption growth and preparedness of the sector participants with new capacities. India's crude steel production improved 0.9% year on year (yoy) and 6% month on month (mom) to 10.4 million tonnes (MnT) in December 2021. During 2021, India's crude steel output was 118.1MnT, up 17.8% yoy. The global crude steel production was 158.7MnT in December 2021, 10.8% mom higher month on month (mom) but 3% yoy lower.

Chinese crude steel production was 86.2MnT in December 2021, 24% higher mom, but 6.8% lower yoy. In 2022, Chinese production is likely to reduce with the government focus of regulating steel output to reduce the environmental impact. In 2021, the global crude steel production was 1,911.9MnT, 3.6% higher yoy.