Extreme lockdown to hit steel recovery in India: World Steel

Sees 18% decline in steel demand in 2020

With the most stringent lockdowns seen anywhere else in the world, World Steel Association believes India is likely to face 18 percent decline in steel demand in 2020, which will rebound by 15 percent in 2021.

“India has implemented the most stringent nationwide lockdown measures in the world, bringing industrial operations to a standstill,” said World Steel in its Short Range Outlook for 2020 and 2021.

Construction activity was halted entirely at the end of March, and recovery is expected to remain slow due to the slow return of labour. Supply chain disruption coupled with slower demand recovery will hit the automotive sector hard while the machinery sector is expected to see a continued decline, with weak private investment and supply chain disruption, said World Steel.

Supported by government stimulus, recovery in construction will be led by infrastructure investment such as railways.

The government’s support to rural income, as well as expected consumption related to the upcoming festive season, will help a substantial recovery of demand for consumption-driven manufacturing goods in the second half.

Global growth shrinkage

World Steel Association expects global steel demand to contract by 6.4 percent to 1,654 million tons (mt) in 2020 before recovering by 3.8 percent to 1,717 mt in 2021.

“This year’s reduction in global steel demand will be mitigated by an expected faster recovery in China than in the rest of the world,” World Steel said.

The forecast assumes that most countries’ lockdown measures continue to be eased during June and July, with social distancing controls remaining in place, and that the major steelmaking economies do not suffer from substantial secondary waves of the pandemic.