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This is reflected by the much lower 5 per cent growth in domestic finished steel production that we expect in the current fiscal.
Coupled with the record ongoing expansion plans, the industry’s capacity utilisation rates are expected to slip from 85 per cent in FY2024 to an estimated 78 per cent in the current fiscal, the lowest we have seen in the last four years,” Kadam said. Following the post-Covid metals rally, the domestic steel industry was able to achieve the “impossible trinity” of maintaining above 80 per cent capacity utilisation rates, a strong investment pipeline, and comfortable leverage levels for three consecutive years between FY2022 and FY2024. But ICRA said this trinity is unlikely to sustain going forward as the recent surge in cheap imports has nibbled at the market share of domestic steel companies, leading to pressure on industry profit margins, lowered capacity utilisation rates, and steadily increasing leverage levels to support ongoing growth plans. Major steel producers that are on an expansion spree have been flagging the issue of cheap imports for a while.
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