[Ferro-Alloys.com] India's demand for steel contracted by 91% y-o-y in April 2020 with end user industries' like auto real estate and infrastructure that constitute 80% of demand, coming to a virtual standstill.
Domestic steel production fell by a record 69.5% y-o-y in April 2020 as per provisional figures. The country produced a mere 2.8 million tonne of crude steel during the month, according to data released by Joint Plan Committee (JPC).
Steel has been classified as an essential commodity and permitted to operate during the lockdown period. However production was impacted due to a sharp fall in demand from user industries, CARE Ratings said in its latest report.
Steel production took a substantial hit in the month of March and April when the country was under lockdown as most user industries witnessed halt in production.
"Domestic steel industry had to scale down their production in absence of demand from user industries. Only top six integrated steel producers are expected to have reported production during the month. These steel companies are working at less than half of their capacities," the report said.
Secondary steel producers are unlikely to have reported any significant production as they are grappling with additional challenges of low working capital and depleting cash reserves under lockdown, the report added.
The slowdown in demand from user industries like construction, real estate, auto and infrastructure which consumes 80% of steel led to the sharp fall in steel production.
Getting back migrant labour who have returned to their home state and restoring the supply chain will be key challenges going forward as steel companies focus on ramping up capacity, the report added.
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