Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Steel demand in India is expected to remain subdued until Q3 FY2021, according to a survey conducted by rating agency Crisil. The sector would gain momentum only after infrastructure and construction activities return to pre-pandemic levels. No major support is expected from sectors like automobile, which is under a prolonged slowdown, while the stimulus measures doled out by the government could ease the cash crunch, opined respondents of the resurvey.


Around 80pc of the respondents feel that Indian steel demand is expected to accelerate in the near term, mainly roads and railways would be the key driver of recovery of demand for long steel and galvanised products. The slowdown in national highway construction is forecast at 9km per day in fiscal 2021 from 11km per day in fiscal 2021, but the construction of roads would continue to progress as planned.


On an average utilisation is likely to be 66-68pc, according to Crisil. Steelmakers are still grappling with supply disruptions despite ports and mining activities being operational during lockdown due to key factors like diminishing demand, logistic constraints, the mass exodus of migrant labour and low availability of trucking fleet.


Amid COVID-19 outbreak, steelmakers were compelled to shut their blast furnaces due to weak demand and lockdown. It is likely to take 20-30 days for the blast furnace to stabilise after the production begins in full swing, opined respondents in the survey.


Steelmakers have turned their focus to exports until the domestic demand recovers. They are likely to focus on managing liquidity along with boosting sales volume and retailing inventory through domestic sales or exports. The market participants believe that incremental government support towards facilitating exports, along with tax and logistics concessions could help them overcome the demand crisis.

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