India’s steel production growth rate declined by 48pc in May from a year ago compared to a drop of 78.7pc in April and 24.1pc dip in March, according to official data. COVID-19-related lockdowns and a slowdown in economic activities has impacted steel production in India. Its cumulative index (April and May) declined by 63.3 per cent from the prior year period. In May 2019, steel production index grew 13.3pc.
The index of eight core industries decreased by 23.4pc (provisional) from a year ago, while the drop was 37pc in April. The index had a de-growth of 30.0pc in April to May period. In May 2019, the eight core sector index grew 3.8pc.
A nationwide lockdown imposed from March 25 restricted manufacturing and production activities in most sectors until the second week of May causing loss of output and a slump in demand.
During the pandemic, primary steelmakers who operate BFs cut production by 40-60pc to match the reduction in demand from end-user segments like automobile and construction. Secondary and small steelmakers shutdown their IF and EAFs amid diminished demand and restrictions imposed by local authorities. Despite being recognized as essential services, many medium to small scale steel mills were denied permission to operate during the lockdown, when the restrictions were eased in mid-May primary steelmakers started to ramp up operations, while secondary producers began to operate at 30-50pc capacity.
Since the lockdown, steelmakers have struggled with a shortage of labour, also absence of demand from infrastructure and construction projects due to monsoon has delayed production ramp ups. Construction sector accounts for over 60pc of India steel demand. Steel demand from auto sector was also weak due to the pandemic as auto sales were near zero in April and tepid in May.