During the 1st eight months of the present fiscal, steel consumption in the nation has reached 53.4 MT which is 21% reduce compared to final year. If the level of consumption in Jan-March’20 is added, steel consumption in the 1st 11 months of the present year 2020 stand at 77.3 MT. In November’20 the nation consumed 8.62 MT of steel which exceeds Nov’19 level by 11%. The growing consumption development has been visible for the final 3 months. If we assume only 5% rise in steel consumption in December’20 more than the final month (pretty achievable), the consumption can attain 9.05 MT which tends to make the country’s total steel consumption at 86.4 MT In 2020 which is practically 5.5% more as compared to the WSA projection of 81.9 MT produced two months earlier. Steel inventory (measured at significant players’ finish) at 13.7 MT at the starting of the present fiscal has been brought down to 10.9 MT by finish of November implying a powerful recovery in the steel market place.
This only proves that the country’s appetite for steel which is a single of the key indicators of financial development in a building economy, is increasing and at a level surpassing the estimates of the forecasting agencies and would continue to be sustained in the coming years 2021 and 2022. The latter expectation is substantially linked with the anticipated development in India’s GDP at 8.8% for 2021 projected by IMF.
It is exciting to appear back at steel consumption in some of the earlier months along with the typical price tag of HRC (excld. GST), for instance, in April’20 (Cons: 1.1 MT, HRC: Rs 36150/t), May”20 (Cons: 4.8 MT, HRC: Rs 35150/t), June’20( Cons: 6.4 MT, HRC: Rs 35375/t), July’20 (Cons: 7.7 MT, HRC: Rs 36400/t), Aug’20 (Cons: 8.1 MT, HRC: Rs 38750/t). Two factors are clear from this information. Steel demand in the course of the 1st 5 months of the year was hovering on an typical 35-40% reduce than earlier year which itself was a year of subdued demand development. As production trend was adverse, the capacity utilisation was incredibly poor and debt servicing became a enormous burden for all the producers. The balance sheets of each and every steel producer, significant or compact, showed enormous deficits, the banks had been exceptionally reluctant to provide any credits even for meeting working capital costs and all functions connected with expansion and upgradation of facilities stood standstill.
Indian steel sector saw by way of the period with grit, courage, exploiting export possibilities to preserve the plant operating with a never ever ending wish to see the market place revival.
The demand for 2/3 wheelers, tractors, passenger automobiles, customer appliances surfaced along with demand from the cost-effective housing segment, infra in roads, water pipelines, Metro expansion, DFC and other building demand from projects in energy plants, railway expansion. For the final two months, the development in manufacturing sector (3.5% development in October’20) has sent a good signal in the market place, specially in the MSME sector.
The author is former DG, Institute of Steel Development and Growth
Views expressed are private