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Thursday, 03 March 16
INDIA'S BUDGET NOT ENOUGH TO BOOST STEELMAKERS' PROFITABILITY - FITCH RATINGS
COALspot.com: Fitch Ratings says that increase in proposed infrastructure spending in India's latest government budget is unlikely to provide a boost to domestic steel demand growth, unless project execution rates pick up significantly. Domestic steel producers also face overcapacity, which is likely to weigh on their profitability and credit metrics in the near term.

The budget plans to increase capex on infrastructure (roads, railways and shipping) in the financial year ending March 2017 (FY17) by 23% to INR2.3trn. For FY16, the government had budgeted for infrastructure investment to double from actual spending in FY15. However, except for a pick-up in road construction (up 36% yoy in 1HFY16), project implementation appears to have been weak so far in FY16.

Private-sector investment has also remained weak, given the stretched corporate balance sheets. As a result, steel demand growth in India has remained soft at 4.7% yoy in 9MFY16. We expect steel demand growth to improve slightly to 7%-8% in FY17, supported by a pick-up in government infrastructure spending with better project execution.

However, the steel industry is burdened by overcapacity. Domestic capacity is scheduled to jump by about 15 million tonnes over the 2HFY16-FY17 period, which will exceed a potential 6 million tonne increase in domestic steel demand in FY17. At the same time, global supply continues to outstrip demand. Given the supply-demand growth mismatch, producers are likely to engage in price competition amid weak utilisation levels. Therefore, a recovery in sales realisation and profitability for Indian steelmakers is unlikely before FY18.


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Recent News

Wednesday, 03 February 16
DRY BULK MARKET CONTINUES TO BE UNDER PRESSURE - INTERMODAL
The Dry Bulk market continues to be under pressure, with the BDI remaining in search of even the slightest support, which seems to be delaying more ...


Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...


Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...


Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...


Monday, 01 February 16
INDONESIA'S SECOND LARGEST COAL MINER ADARO ENERGY HAS PRODUCED 51.46 MT IN 2015; 8% LOWER COMPARED TO FY14
COALspot.com: Adaro Energy, the Indonesia’s second largest coal producer by volume  has produced 51.46 Mt in 2015, 8% lower compared to ...


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