Operating margins of the Indian steel industry slid to 15.4pc in the second quarter from 22.1pc in the second quarter of prior year as steel prices corrected and raw material prices increased, according to Indian rating agency ICRA. Steelmaker’s operating margins were 18.2pc in the prior quarter. The industry’s operating margins are expected to remain at 16.3pc for the fiscal year 2020.
The interest coverage ratio also declined to 2.2 times in the second quarter from 3.4 times in the second quarter of the prior year attributed to dip in profit margins. While the ratio was 3.0 times in the previous quarter.
Production cost
Domestic blast furnace operators’ cost of production is expected to decrease to around $50/mt in third quarter as coking coal and Indian iron-ore prices trend southwards. Spot prices of premium hard coking coal that traded at US$ 202/mt plunged to $178/mt. Although, in October and November 2019, spot prices traded in the range of $135-150/mt.