Moody’s says Indian industry is expected to do well because of protection measures announced by the Union government. Jiming Zou, Moody's vice-president and senior analyst said, the profitability of Indian steel companies will be better than those of their regional peers “owing to rising domestic demand, minimum import prices and anti-dumping duties.”
India’s protectionist measures will also impact major producers in China and other countries, it said. Korean and Japanese steelmakers, too, will be hurt by export restrictions, while Japanese companies will continue to suffer from the strengthening of the Yen, the report said.
Some loss-making small or inefficient steel companies in China have suspended production, and supply-side reform is driving consolidation.
However, these will have a limited impact in the next 12-18 months, given declining demand and substantial overcapacity in China.
Moody’s said it would consider changing the outlook to stable, “if we expect China's Purchasing Managers’ Index to stay above 50, indicating expansionary manufacturing activity, and Ebitda (earnings before interest, taxes, depreciation, and amortisation) per tonne of major Asian steelmakers to show signs of improvement in the next 12 months. Both factors would stabilise steelmakers’ earnings”.