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COVID-19 to Hit Expansion Plans of Indian Steel Mills

https://en.steelhome.com [SteelHome] 2020-04-10 14:04:44

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According to experts, the outbreak and spread of the COVID-19 pandemic may adversely impact the expansion plans of domestic steel makers. Until now several ratings agencies have been pointing out that the spread of coronavirus has adversely affected the steel markets across the world including India in-terms of prices, profit margins, affecting raw material supply chain, demand and building up of inventories. According to Corporate Sector Ratings Icra Senior Vice-President and Group Head Jayanta Roy, the outbreak and spread of the novel coronavirus will take a toll on Indian steel player’s expansion plans. He said “Even before the outbreak, we have seen that some companies have deferred their plans of commissioning green field and brownfield projects.”

India Ratings Senior Analyst Akash Krishnatry said COVID-19 pandemic is expected to push the expected India’s steel capacity expansions by 3-9 months depending upon the severity, spread, duration of the virus along with the preventive measures adopted. He said “Preventive measures like country-wide lockdowns and logistical challenges shall defer the expansion plans as steelmakers need to conserve liquidity in these times while cash flow from operations would be severely impacted. Also, continuing construction would also not be possible in these times, though overall project costs could also increase due to time overruns.”

Indian players had been working on expansion plans in line with the government’s ambitious target of scaling up the total steel making capacity to 300 million tonne per annum by 2030. Many steel makers in India have scaled down their production by up to 50 per cent amid the nationwide lockdown in the wake of the pandemic.

Source: STEELGURU
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