India's Steel Demand to Grow in Single Digit in 2015: Moody's

New Delhi: Steel demand in India will grow in single digit in 2015 buoyed by government's infrastructure spending, according to rating agency Moody's Investor Services.

"Regionally, Moody's expects flat demand in Korea and Japan, while India will post single-digit demand growth as the new government invigorates infrastructure spending," it said in a statement on Wednesday.

Steel demand growth in China would be negatively affected by the slowing domestic economy and weakness in the property market, which is one of the primary end-markets for steel. The sluggish steel demand would impact steel-makers in Asia because China accounts for approximately 70 per cent of the region's steel demand, it said.

Asian steel companies would face increasing operating challenges in current year as Chinese steel demand slows, the rating agency said, adding it would change its outlook on the Asian steel sector to negative from stable if the weakness persists.

"Indian steel companies - because of import duty and/or captive iron ore supplies - will enjoy the highest profitability among the cohort," it said.

The profitability of Indian steel companies such as Tata Steel and JSW Steel, despite being pressured by imports, will remain the highest in the region as a result of import duties/taxes and captive iron ore supplies in the case of Tata, it said.

"We expect Japanese steel companies such as Nippon Steel and Sumitomo Metal Corp and JFE Holdings Inc will continue to benefit from the weak yen, which makes their cost structure more competitive," Moody's said.