‘Steel demand to fall 25% this fiscal on Covid crisis’

Our Bureau Mumbai | Updated on April 16, 2020 Published on April 16, 2020

Utilisation level of players will also dip, says Crisil Research

Steel demand is expected to fall 25 per cent this fiscal as the Indian and global economy struggle to recover from the destruction caused by the Covid pandemic.

This apart, the economy is grappling with the lockdown, reduced discretionary spending and a delayed capex cycle.

“We expect the perfect storm to affect construction activities and automobile production, and thereby steel demand. Based on our analysis of the spread and containment period of the pandemic, we expect steel demand to contract 14-17 per cent this fiscal,” Crisil Research said in a report.

However, the extended vulnerability will increase the demand contraction to 22-25 per cent during the financial year, it added.

In the June quarter, steel demand would be washed out by the pan-India lockdown. All automobile plants have also been shut, which will further weaken demand prospects, it said.

The contracting demand will pull down steel companies’ utilisation level to 67-70 per cent in this fiscal, against 76 per cent logged in FY 2020.

An additional capacity of 10 million tonnes expected to go on stream in the first half of this fiscal will be delayed.

Prices dip

Weak steel demand is expected to pull down global prices. Demand in the March quarter is estimated to have declined 30-40 per cent even as economic activity picked up in China in March after the Covid-induced slump in February.

The slump in demand has led to high inventory levels of 100 million tonnes. Steel export from China has come to standstill as other economies grapple with Covid, leading to a 4 per cent year-on-year fall in prices to $486 per tonne in the March quarter.

China steel prices are expected to fall further owing to the weak demand, taking global steel prices to $440-470 a tonne in 2020.

While global hot-rolled coil prices are expected to contract by 6-8 per cent, rupee depreciation and anti-dumping duty levied on imports from China will thwart a free fall in domestic steel prices.

The decline would be limited to 3-5 per cent for flat steel since there was a massive slump in prices in fiscal 2020.

Long-steel prices will decline 6-8 per cent in this fiscal, with secondary players lowering their offers in response to weak demand prospects amid competition.

Published on April 16, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!


Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.