Demand dodges Covid curveball

Consumption of steel is reviving across most sectors pushing up prices

- Sumit Maitra and Tamajit Pain

India’s steel sector has now turned the corner post lock-downs with meaningful recovery in domestic demand across several sectors and improved margins.

And it’s not just cost push because of higher raw material prices but demand pull also which have led to sharp price hikes across the board and steel producers continue to raise prices even in October.

And the momentum is expected to continue as there is still some steam left.

Domestic demand

The domestic steel demand in India has recovered in the past three months and is back to the pre-Covid levels largely due to an increase in demand from automotive and white goods.

These sectors have seen significant demand revival with the lifting of lockdowns across the country.

And, while construction sector has revived in a limited way particularly in the affordable sector, further rebound is likely post the monsoon and return of migrant workers who had deserted construction sites earlier.

At the same time, higher regional prices and tight domestic supply situation due to higher export bookings by domestic steel mills have resulted in an increase in prices of Indian hot rolled coil (HRC) steel.

Flat steel prices have risen by 15 percent over past two months and are above 9 percent above pre-Covid levels i.e., March 2020.

Improvement in domestic consumption will help all the major steel players in the country.