India consumed 93.4MT of steel in FY21, 6.7% reduce than the pre-Covid year. It is probably that true consumption could be revised to about 95MT when final figures are compiled.
Excluding the consumption figure for the initial quarter in FY21 which was actually washed away by the devastating influence of the catastrophe, it is observed that from July’20 to March’21, in the nine months’ period, the total steel consumption in the nation was 81.2 MT as compared to 75.4 MT in nine months’ of FY20.
This shows that India has consumed 7.7% more steel that is about 57,00,000 tonne of further volume of steel has been consumed through the period.
Two aspects can be identified to be accountable for this. First, financial activities have been slowing down from Q2 of FY20 as evident from declining GDP development in each and every subsequent quarter and then moving up in the positive zone in Q3 of FY21.
Second, the pent-up demand in Q4 of FY20 and Q1 of FY21 expressed itself from Q3 FY21 onwards as fresh demand also surfaced on account of emerging demand from automobile, rural and housing sector and infra.
Gross fixed capital formation (a proxy for investment) as a per centage of GDP (existing industry rates) has moved up marginally from 27.3% in Q2 to 27.7% in Q3. This trend even so does not take away the truth that In FY21 there has been a dip in GFCF. The government final consumption expenditure (GFCE) as a per centage of GDP has moved up from 11.6% in HI of FY20 to 12.8% in HI of FY21. For the complete year also, GFCE (at continuous rates) in FY21 at 11.8 exceeds the figure for FY20 at 10.6%.
The price of development of private final consumption expenditure (PFCE) was subdued, even so, in each and every quarter of FY21 it has maintained a greater development as nicely as a greater share of GDP, despite the fact that on an annual basis, the share of PFCE in FY21 was reduce than what it was in FY20 with GDP declining by 8.%.
Thus, a sustained private and government consumption expenditures supported increasing demand for customer appliances, sales of passenger automobile, 2 wheelers. Increasing rural demand led to greater sales of tractors for each agro use and transportation. Public investment came to play its positive function in lifting up the economy from Q3 onwards only and it is in sync with equivalent trend observed in other big economies also, even so social security net in sophisticated nations was substantially bigger compared to India.
Total production of crude steel at 102.4 MT was reduce by 6.1% compared to FY20. The share of public sector (SAIL, RINL, VISL) remains very same at 19%. While production by tiny and medium enterprises is reduce by 7.9%, its share in total production of crude steel had a marginal drop from 37.3% in FY20 to36.6% in FY21. Inadequate availability of iron ore in Odisha constrained the production of SME units in the eastern area for a couple of months.
In addition, there was short-term disruption of labour provide due to the migrant workers’ challenge following the Covid 19 pandemic. The inventory position of completed goods gave a substantially far better situation in the existing year. While FY20 ended with a stock accretion (at the big producers’ finish) of .86 MT, there was a stock depletion of more than 4.8MT in FY21. Inventory depletion is a fantastic indicator for industry improvement.
Covid impacted total imports in FY21 at 5.2 MT are reduce by about 28%. Steel exports from India at 17.8 MT is a record right after numerous years and indicates a 59% rise more than final year. It could be pointed out right here that 17.8 MT of steel exports include export of semi-completed steel of the order of about 6.6 MT against final year’s volume at 2.8 MT only. China accounts for about 50% of semis export from India and the balance volume of semis had gone to Indonesia, Philippines, Thailand, Nepal and other folks.
A couple of positive adjustments have been observed in the functioning of steel plants in FY21. As physical presence of people today manning the steel plant have been mandatorily much less with social distancing, the thrust on digitalization of the big activities and work from residence became the practice. It also created doable to the management of steel corporations to bifurcate the jobs that can be outsourced and these requiring direct engagement of people today and thereby reach a price successful manpower method.
Rising trend in steel rates in which domestic rates are at a discount with international rates, shows that industry demand is sufficient, each in the domestic and international industry thereby providing ample possibilities to Indian steel players to reap positive aspects in terms of realisation, bringing down debts and strategy for capacity addition particularly for worth added products to make India Atma Nirbhar.
(Views expressed are private)