Impacts of COVID 19 remains the same, the predictions were not the way expected on the recovery of steel demand. ICRA had a positive forecast about the steel demand and then reveals that there will be a delay in steel demand as the lockdown has extended.
ICRA Report on Indian steel demand
As per the early predictions, the graph of steel demand fell 21 % in the month of March and 91% in April. The latest report of ICRA says, In the FY 2021, there is a 20 % fall which was quoted as a record fall on domestic steel demand. Another term used to quote this is “sharpest fall”.
Restarting the steel industry with the current revenue year being the most challenging for steelmakers.
Primary Customers of Steel Industry
The substantial amount of business for the steel industry comes from the automakers and constructors who are one of the key customers of the steel industry. The pandemic played a major role in the steel demand of both the industry. Construction works are running with 30% of workers where others are staying away from the work sites.
Indian Auto motor Industry
Maruti Suzuki, India has already kick-started their vehicle production at its third plant in Gujarat on May 25. The restart of Maruti Suzuki recovers the vehicle production not only in Gujarath but also in other two of its largest plants in Gurugram and Manesar on 12th May and 19th May. And some of the large scale makers in Chennai India have also resumed their operations on 8th May in accordance with government regulations and guidelines.
Impacts on Resuming the Operations
Once the primary and most demandable business line of steel industry resumes their operations, there might be a slow rise in the graph of domestic steel demand. However, there are four employees were tested positive for COVID-19 from two different firms. This restart is way risky on the lives of the laborers and employees of this industry.
Restart of Construction Works
The construction of residential buildings and commercial buildings always has a higher demand on steel. Even during this time of lockdown, construction work is getting back on track slowly. Major and enormous cities like Mumbai, Bangalore, Pune have started resuming their construction work in a very gradual manner. However, the primary steel-consuming states such as Delhi, Tamil Nadu, Andhra Pradesh, Telangana, Rajasthan, and Punjab are majority under the Red zone.
Risks in Construction Works
The developers are running against the project deadlines which may end in paying penalty for the delayed work. Also concerning the safety measures of the laborers, only 30 % of the workers are allowed in sites. The Government has announced a 20 Lakh crore COVID 19 packages largely targeted on providing the needs of the social sector rather than resuming the steel industry which might take time to become stable in the graph.
In General, Auto industry consumes 20% of steel demand and construction works consume 15% .
Let’s have hope on the reboot of auto motor sectors as it can move the graph from negative to stable growth in the steel demand.
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