After a period of negative news following the COVID-19 pandemic, there’s finally some cheer for India’s steel industry, particularly related to Indian domestic steel demand.
Domestic steel demand has bounced back to pre-COVID levels. Automotive and white goods sector demand have driven the steel demand recovery.
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Indian domestic steel demand recovers
As per a report by financial firm Motilal Oswal, higher steel prices and lower coking coal prices ensured Indian primary steel producers’ margins remained strong. In addition, the report noted there were signs of domestic steel demand recovering gradually in the country.
The Motilal Oswal report also pointed out that India’s finished steel consumption, too, is recovering gradually. India’s finished steel consumption registered a drop of as much as 85% year over year in April 2020.
Chinese demand boosts Indian steel
What’s more, a renewed demand in the largest steel consuming market in China also boosted the bullish steel market in India.
Steel trade data by China shows demand remains strong there. China’s net steel exports declined to 10-year lows in September 2020. In addition, China saw a spurt in passenger car sales in September.
Because of these developments in China, its fallout was also seen in the Indian markets. Steel prices have also firmed up and have shown consistent increases over the last four months since July.
Enhancing per-capita steel consumption
Meanwhile, seeing the greenshoots of steel recovery, India’s Steel Minister Dharmendra Pradhan asked industry body Confederation of Indian Industry (CII) to submit a report on how to enhance per-capita steel consumption in India.
The minister gave CII a month to engage with various ministries, including steel departments and stakeholders.
The minister made this announcement in a webinar. He said the objective is clear: to increase per-capita steel consumption in the country. Currently, per-capita consumption in India is at 74 kg.
Now, Indian steel mills look with hope to the infrastructure sector, especially the construction segment, hoping it starts to recover.
Not only India’s steel production has been on the rise due to improved capacity utilization, the production of crude steel, too, is showing an up.
Incidentally, India turned to a net exporter of steel during April-August, with net exports of 4.0 million tons versus net imports of 0.9 million tons in the same period last year.
But with domestic demand going up, many Indian steel companies have started lowering exports.