Steel demand to fall by up to 25% due to lockdown

The nationwide lockdown triggered by the Covid-19 pandemic is taking a severe toll on steel companies with experts estimating a demand slump of up to 25%, even as rating agency Moody’s has placed Tata Steel and JSW under review for a ratings downgrade. “The economy is grappling with lockdown, factory shutdowns, reduced discretionary spending, and delayed capex cycle alongside external factors such as weak global demand, supply disruptions, and worldwide financial shocks.

“We expect this perfect storm to affect construction activities and automobile production, and thereby, steel demand,” Crisil said in its latest sector report. “In our baseline scenario, steel demand in India would contract 14-17% this fiscal. Extended vulnerability, on the other hand, will increase the demand contraction to 22-25%,” the report added.

Research estimates show a weak steel demand in the first quarter, led by the Covidrelated lockdown. While demand would contract in the second quarter as well, pentup demand release would aid growth in the second half, the report said.