Because India extended its national blockade order until May 3, considered one of the most serious reactions to the COVID-19 pandemic, Indian steel companies have struggled to support the succession. effective disease control planning, in the absence of demand.

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Ahead of Indian Prime Minister Narendra Modi’s announcement on the extension of the blockade on Tuesday, Indian factories were reportedly preparing to fully re-operate factories that had stopped production under the blockade orders on Tuesday. March 25, and wait for the Government to issue further guidelines on April 15.

Modi pointed out that a gradual resumption of economic activities may be allowed after April 20 in areas without COVID-19 or to show improvements in disease control.

The economy after the blockade is expected to be in re-establishment mode because the domestic supply chain has been unstable, with liquidity restrictions likely to appear and migrant workers will not be able to return to work. work soon.

Impact of expanded demand

India’s main plants have opted for a strategy with strong supply-side controls, as previously reported, announcing a production shutdown on March 24 with BF-BOF operations. be heard to use only 30% -40% of capacity.

At the same time, units based on EAF / IF as well as downstream companies remain closed, limiting possible oversupply.

However, the strategy of restricting supply may not work because the steel consuming industry is still closed, some industry sources said this week.

“Let us see, if we can even operate for at least 14 days this month,” a factory source based in Vijaynagar said. “We are operating with low usage for our export orders, an increase in the country almost no … inventories are piling up everywhere.”

According to Indian Ministry of Steel data for April 2018 – March 2019, 47% of India’s crude steel production is produced from BF-BOF, 26% from EAF and the rest from IF units.

With the resumption of operations in the automotive sector and the remaining manufacturing sectors, the HRC market may be under pressure with domestic factories expected to maintain production to a minimum.

Steel companies are also considering exporting semi-finished and finished steel products to Vietnam and China, also clearly seen in the data with India’s HRC offers to Europe reaching 405 Euro / tonne CFR Antwerp, equivalent to 438 USD / ton and to Southeast Asia at 390-400 USD / ton CFR Vietnam.

“I think the focus for factories will still be exports,” said a Mumbai-based exporter. “As we are preparing to enter the monsoon period, I think any improvement in the inland area will only go to Diwali (festival in November 2020).

2014-2016 price back?

N hững market participants foresee impairment similar period of 2104-2016, when the price of steel India are on a trajectory to decline.

The weekly spot price of HRC IS2062 2.5-10 mm thick delivered to Mumbai decreased from Rs 45,610 / ton at the beginning of March 2014 to Rs 28,666 at the end of January 2016, equivalent to 37%.

While cheaper imports from China were the main reason for the decline at the time, the weakness in basic demand took the domestic market nearly a year and is likely to continue for a minimum of 6 years. Another month, the source said.

Because of the blockade, construction activities, which account for more than 60% of steel consumption in India, have been stuck, a source in the New Delhi-based industry said.

The auto industry will continue to slide as GDP slips further, with negative effects on employment, income and purchasing power at the same time.

Although imports into India were still a major problem during 2014-2016, imports are almost absent today with the introduction of trade remedies policies such as minimum import prices and taxes. anti-dumping as well as temporary safeguard tariffs. These have been able to protect the domestic industry from the ambiguity of changing global trade dynamics, with anti-dumping reference prices. 478-561 USD / ton, ignoring any lower supply capacity from China PR, Korea RP, Russia, Brazil and Indonesia.

Imports to India from April 2019 to February 2020 totaled 6.36 million tons, down 10.4% from the previous year, according to data from the Joint Plant Committee.

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