India's steel demand likely to fall by 18% in 2020, Worldsteel report

India's steel demand is likely to face a steep decline of 18 per cent in 2020, while the global steel demand is expected to contract 6.4 per cent to 1,654 million tonnes (MT) due to the Covid-19 crisis, according to industry body worldsteel.

According to official figures, India consumed over 100 MT steel during 2019.

"In 2020, worldsteel forecasts that steel demand will contract by 6.4 per cent, dropping to 1,654 MT due to the Covid-19 crisis," the World Steel Association (worldsteel) said in its latest Short Range Outlook (SRO), a publication on steel demand scenario.

Steel demand in developed economies is expected to decline by 17.1 per cent in 2020.

Although the downturn is led by consumer and service sectors, massive dislocations in spending, labour markets, and confidence are fuelling declines in steel-using sectors, the global body said.

"While, the steel demand in the developing economies excluding China is expected to fall by 11.6 per cent in 2020. India is likely to face an 18 per cent decline in steel demand in 2020, which will rebound by 15 per cent in 2021," it added.

In India, it said, the government implemented the most stringent nationwide lockdown measures in the world, bringing industrial operations to a standstill. Construction activity was halted entirely at the end of March, and recovery is expected to remain subdued due to the slow migration of labourers.

Further, supply chain disruptions coupled with slower demand recovery will hit the steel-using industries like the automotive and machinery sectors.

On demand recovery, worldsteel said global steel demand is expected to recover by 3.8 per cent to 1,717 MT in 2021.

The reduction in global steel demand will be mitigated by an expected faster recovery in China than in the rest of the world.

In India, the government's support to rural income, as well as expected consumption related to the upcoming festive season, will help in substantial recovery of demand for consumption-driven manufacturing goods in the second half, it said.

Supported by the government stimulus, recovery in construction will be led by infrastructure investment such as railways. The demand in India will rebound by 15 per cent in 2021, it said.