Steel demand decreased during Corona outbreak:
In 2020, India’s steel consumption was 88.5 million tonne (MT) which is 12% less than 2019 (100 MT). It is due to the impact of the coronavirus pandemic, closely connected with economic growth. Steel dependent industries like Automobile, Construction, Machinery are affected majorly during the crisis which leads to a reduction of the steel demand in India.
Steel demand grows post-lockdown 2020:
After the lockdown release in August 2020, the Infrastructure projects are in great demand for steel in India rather than other industries & it helped to speed up the steel consumption. Steel demand has grown faster after a lockdown in rural areas rather than urban areas. Rural areas are less affected during the Covid-19 so the steel demand has grown faster there. However, many experts say that the full growth of domestic steel consumption will be possible after the next one or two quarters. Following that, exporting steel to other countries like China will slow down in the coming months. Giving the first choice to domestic steel consumption rather than exporting will increase economic growth gradually.
Recovered steel demand affected by 2nd wave of Covid-19 (2021) in India:
The economy has been recovering strongly since August, much sharper than expected, with the continuation of Government projects and other construction demands. According to the WSA, globally steel demand will grow by 5.8% in 2021 to reach 1,874 MT, after declining by 0.2% in 2020. In 2022, global steel demand is expected to see further growth of 2.7% to reach 1,924.6 MT. The second wave of virus and the lockdown is the major threat for the steel production and it will normalize in the second quarter of FY 2021 with the help of continuous vaccination to the people. Also, the evolution of the virus and progress of vaccinations, geopolitics and external trade will definitely affect the recovery of steel demand, WSA said.
Steel price increase:
Due to the limitation of exporting steel from China’s Tangshan region after the first wave of Coronavirus, steel prices in the export market have increased by 6-8% in April 2021 in comparison to the previous month. The effect also increased the steel prices in the domestic market. However, domestic prices are still at a discount to global prices. During FY21, India imports declined by 30% which is a healthy sign for domestic steel manufacturers. Steel exporting decrease from the other countries resulted in the steel price increase of INR 4,000/tonne in the domestic market in April 2021 on a monthly basis. The steel price demand and increase will be expected to be affected by the second wave of virus and long period of lockdown in many states. The recovered steel demand will decrease gradually if the worst situation continues.
Conclusion:
The recovery of steel demand and steel price depends on the pandemic situation. Currently, the domestic steel market in India is increasing gradually, but in the upcoming months it may slow down. In the second quarter of FY 2021, the steel demand is expected to increase and get back to the normal situation.