The India Steel Association (ISA) has estimated India’s steel demand could fall by 7.7pc in 2020 on the back of COVID-19 and its effect on the economy. Finished steel demand in India is estimated to fall to 93.7mn mt in 2020 from around 101.5mn mt in 2019. In February, ISA had predicted that domestic steel demand could grow by around 5.1pc and touch 106.7mn mt.

 

The revised demand forecast assumes that the lockdown will not extend beyond 40 days; the government will provide further fiscal stimulus to kickstart stalled projects and boost demand; and supply disruptions, challenges will be overcome by early June. If these assumptions are not met, demand could decline even further.

 

ISA states, Indian steel demand remained sluggish throughout 2019. In the first two months of 2020, however, it showed signs of recovery. Manufacturing and services sectors had begun to pick up but the pandemic halted this recovery.

 

By the third week of March, India’s economic activity had nearly come to a standstill with the government announcing a nationwide lockdown. Industries are expected to resume gradually now, but it could take a month at the minimum for demand to recover. 

 

Manufacturers also have to overcome challenges like getting migrant workers back to manufacturing/construction zones, resetting disrupted supply chains and overcoming liquidity crunch among others. 

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