Domestic steel demand has grown by 5.2 per cent during the first nine months of 2017-18 which is positive for the industry, rating agency ICRA has said.

The rise in demand was aided by a buoyancy in the automobile sector and recovery in the construction and capital goods sectors, the agency said in a statement.

Going forward, ICRA expects domestic consumption growth to be favourable in the backdrop of the government's thrust on infrastructure, particularly in affordable housing and power transmission segments.

"A combination of favourable factors like domestic demand rise in domestic and international markets and lower growth in imports would help the sector in the days forward," ICRA said.

In a sample study of 22 large abd mid-sized steel companies accounting for about 60 per cent of present internal capacity of the industry, ICRA found that operating margins in the third quarter of the current fiscal had increased along with better interest cost coverage.

The resolution process under IBC for five steel companies, accounting for 17 per cent of installed capacity, had also seen partcipation from both domestic and international entities, it said.