The World Steel Association (worldsteel) in its latest Short Range Outlook (SRO), a publication on steel demand scenario, has said that India's steel demand is likely to face a sharp decline of 18% in 2020, while global steel demand is expected to contract 6.4% to 1,654 million tonnes (MT) due to the COVID-19 crisis. It added that Steel demand in developed economies is expected to decline by 17.1 per cent in 2020. Besides, India consumed over 100 MT steel during 2019.
The global body said although the downturn is led by consumer and service sectors, massive dislocations in spending, labour markets, and confidence are fuelling declines in steel-using sectors. While, the steel demand in the developing economies excluding China is expected to fall by 11.6% in 2020. It added that India is likely to face an 18% decline in steel demand in 2020, which will rebound by 15% in 2021.
In India, the government implemented the most stringent nationwide lockdown measures in the world, bringing industrial operations to a standstill. Construction activity was halted entirely at the end of March, and recovery is expected to remain subdued due to the slow migration of labourers. Further, supply chain disruptions coupled with slower demand recovery will hit the steel-using industries like the automotive and machinery sectors.
On demand recovery, worldsteel said global steel demand is expected to recover by 3.8% to 1,717 MT in 2021. The reduction in global steel demand will be mitigated by an expected faster recovery in China than in the rest of the world. In India, the government's support to rural income, as well as expected consumption related to the upcoming festive season, will help in substantial recovery of demand for consumption-driven manufacturing goods in the second half. Supported by the government stimulus, recovery in construction will be led by infrastructure investment such as railways.
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