Domestic steel demand is on a gradual path to recovery as industrial activities have started resuming after months of hiatus amid COVID-19 related lockdown. Major players like Tata Steel, JSW Steel and Jindal Steel & Power (JSPL) witnessed an uptick in domestic sales in June from the preceding months, according to media reports.
Domestic sales by Tata Steel accounted for 40pc of the total in May, which are expected to clock 50pc in June. For JSW Steel, sales in Indian markets are estimated to account for 50pc of the total from 40pc in May.
Jindal Steel and Power (JSPL) estimates its domestic sales to be at 60pc of the total, compared to 50pc in the preceding month. JSPL recorded its highest ever monthly sales in May with 640,000mt, up by 28pc from May 2019. The steelmaker says July sales in the domestic market could account for 70pc of the total.
Domestic demand in India is mainly being driven by rural areas. Sales of tractors, motorcycles and roofing sheets have increased in these areas, with a ripple effect on steel. Additionally, construction activities started gaining momentum in May after the government granted a few relaxations.
Steel demand is expected to accelerate post-monsoon when construction activities are likely to pick up. Construction and real estate sectors drive 60-62pc of steel consumption. The automobile sector, which accounts for 15-16pc of the country’s steel demand, is expected to recover gradually.
Until the domestic demand recovers, steelmakers will continue to bank on exports to keep production operations running.