Steel demand grows post-lockdown as rural activity outpaces urban growth

There has been a recovery in domestic demand for steel, especially during the post lockdown period, as well as an increase in steel prices. However, many experts say that a full uptake of domestic steel consumption will only be possible after the next one or two quarters. Steel exports continue to see supply chain disruptions, though these are expected to ease with rising exports to countries such as China, Vietnam and the UAE.

Experts point out that steel production In India was declining since March 2020, although the output had improved in July compared to the low levels in April when India had imposed strict lockdown measures. The low domestic demand for steel also created large scale inventory in the Indian steel sector. At the same time, the surge in the COVID-19 cases continues to pose supply chain disruptions. 

As per the data from the Ministry of Steel, India had emerged as the second-largest producer of crude steel during 2018 and 2019 from its 3rd largest status in 2017. The country was also the largest producer of sponge iron in the world and the third-largest finished steel consumer in the world after China and the US in 2019. In 2017 the government released the National Steel Policy, which laid down the broad roadmap for encouraging long term growth for the Indian steel industry, both on-demand and supply sides, by 2030-31. The government had also announced a policy for providing preference to domestically manufactured Iron and Steel products in government procurement.