Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Steel prices have improved but could face headwinds, according to a report by India Ratings and Research (Ind-Ra), citing subdued domestic steel consumption in the first quarter of FY2022 (Apr-June). The agency believes the second wave of the COVID-19 pandemic will impact India’s steel consumption in Q1, which could be lower than the March quarter (Q4) but still above Q1 FY2021 when India was under a complete lockdown.  


Low demand from the auto and consumer durable sectors and delays in construction and infrastructure work will impact the steel industry but strong international prices and demand from the export market could help offset some pressure. High freight rates and tight availability of container, however, remain a challenge.


In April, India’s finished steel consumption dipped to 6.78mn mt, down 25.7pc from March but up by 516.8from the low base of last year. While crude steel production was at 8.3mn mt, down by 20.6 from March and up 141.8pc from a year ago. The recovery in steel output was driven by higher capacity utilisation supported by exports. Also, lower production in April allowed for absorption of inventories, which fell to 8.4mn mt, down by 3.5pc from March.


Globally, crude steel production rose to 169.5mn mt, up by 23pc from last month as economic activities resumed with the progress of vaccination. The agency opined, the dip in Chinese steel future prices could impact Indian exports orders and domestic steel prices in the near term, leading to headwinds for the Indian steel industry.

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