Fitch sees stable outlook for steel firms in H2
Mumbai: Despite a slowdown in demand, the outlook for domestic steel producers will remain stable in the second half of the current financial year, a report by rating agency Fitch said Thursday.
"The outlook for Fitch-rated steel producers in the country will remain stable in H2, despite slowdown in growth," the report said Thursday.
As per the rating agency, demand for steel is likely to be in the range of 6-7 percent, with higher activity after the monsoons.
"Slowdown in demand stems from the unfavourable macroeconomic environment," the agency said which has revised down its forecasts for real GDP growth to 6.5 and 7 percent for FY13 and FY14 respectively, from 7.5 and 8 percent respectively which it had put out earlier.
On profit margins, it said margins would be under pressure during this period due to rise in production cost.
"Profit margins will remain under pressure in H2, given persistent increases in production cost and producers' limited ability to pass on higher costs due to subdued demand from end-user industries," it said, adding pressure will be greater on non-integrated steel producers.