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Ongoing Challenges and Expected Recovery of Indian Steel Sector

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by - 6/14/2020 2270 Views

Indian Steel Association has forecasted and expected a well-versed growth in Indian steel demand to grow around 7.2% in the year 2020.

Forecast on Indian Steel Sector by ISA

Indian Steel Association has forecasted and expected a well-versed growth in Indian steel demand to grow around 7.2% in the year 2020. Due to the Lockdown ISA had forecast and estimated the decline in demand to 8% in last April. Steel Ministry has noticed that there is a huge hit from automotive sectors and manufacturing sectors due to lack of production and lower demand for Steel. The domestic Steel industry has amended its interpretation from stable to negative. As we have seen there is a continuous decline in steel demand for the past three months.

World Steel Report on Indian Steel Demand

World Steel Association has given a report on its Short Range Outlook (SRO) saying; globally the steel demand is expected to shrink by 6.4 percent to 1,654 million tones (MT) due to the Covid-19 crisis. Whereas Indian steel demand has to face an 18% decline in 2020. This downfall is majorly headed by the consumers, massive dislocations in spending and labor markets are an adjunct to a continuous decline in steel demand. On the other hand in the first quarter of June 2020, the Indian steel demand has got a 65% fall which is again an extreme drop in the steel industry. This is accountable by the construction sector due to the labor shortage.

Price Defeat in Indian Steal Market:

Ind-Ra report says that Due to the oversupply of Steel and a drastic fall in domestic demand has led away to a price defeat or we can say a suppressed price in Indian Steel Market. The surplus availability of steel and the muted demand from the domestic industries also has other issues like reduced labor force. The scarcity in manpower again leads to trouble for finished inventory to normal levels. The oversupply of steel can be amended by driving out a substantial volume of steel out of the market or a sudden increase in steel demand can resolve this.

Indian Steel Industry as a Developing Economy

In the global developing economy, the steel demand is expected to fall by 11.6 percent in 2020. While the Indian steel industry is already facing an 18 percent decline in steel demand in 2020. Indian Government has strictly implemented the nationwide lockdown which has muted the most steel demanding sectors like the construction, automotive sector and machinery. This is also due to the slow migration of laborers.

India’s Free Trade Agreement

As we know, the Indian steel industry is already facing challenges with the ongoing trade war between the US and China. Here FTA is going to be another hit. A recent report says steel export to India through FDA has gone around 58 % to 77%. Under a free trade policy, traders can buy and sell goods and services across international borders no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange. India has a free trade agreement between the ten member states of the ASEAN countries, China, Japan, India, South Korea, Australia, and New Zealand. The Indian steel industry has already raised a very serious concern to the government regarding FTA which would hopefully be taken care of.

Indian Government in Steel demand Recovery

There is a huge expectation on the Indian government that can take a major role in the recovery of Indian steel demand. By resuming the construction works and infrastructure investment such as railways and other major government projects can help our steel demand to see substantial recovery in demand. Another way of steel demand can be increased by the upcoming festivals which can be expected to have a huge demand for steel. This can rebound Indian Steel demand recovery by 15% in 2021.

Find visually video summery on this at https://youtu.be/q1kdpHlR5Ck


Category : Metal

Tags : Steel sector, Steel demand forecast, Indian Steel Association, Indian Steel demand, Indian Steel Scenario, Scrap Price

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