The implementation of big-ticket infrastructure projects will lead to a sharp jump in steel demand, which has taken a hit due to the Covid-19 pandemic, a top RINL official said.
The outbreak of Covid-19 pandemic followed by the lockdown has impacted production, sales and dispatch of steel in India, Rashtriya Ispat Nigam Ltd (RINL) CMD P K Rath told PTI.
The slowdown in industries like construction, auto, and infrastructure, which together consume about 80 per cent of steel production, during the lockdown led to a slump in demand of steel in the country and as a result inventory levels have increased, he said.
Steel demand contracted by about 6-7 per cent in the fiscal ended March 31, 2020, he added.
Replying to a question on when the industry expects a pick up in steel demand, Rath said, "The government has already given some relaxations from April 20 onwards to help industries across the sectors. It has also announced investment into big-ticket infrastructure projects.
"Implementation of these projects will shoot up the steel demand significantly. If everything goes fine, the industry is going to look up in the second quarter, when the demand will start coming."
A government task force recently projected total investment of Rs 111 trillion in infra projects over five years to augment infrastructure and create jobs in the country.
The task force was set up following Prime Minister Narendra Modi's Independence Day speech of 2019 where he outlined an investment of over Rs 100 trillion in infrastructure.
Rath further said that India will need to take precautionary measures to protect domestic steel sector as countries like China, which have huge inventory build-up, may try to dump their products when demand rises in India.
To safeguard the industry, he suggested imposing anti-dumping duties and increasing import duties on steel products.
Speaking on the impact of Covid-19 on the company's operations, he said the company had to reduce its production levels as the demand was impacted.
It has shut two of its three blast furnaces and brought down its production to 6,000 tonnes per day, Rath said.
"RINL has built up an inventory level of about 8 lakh tonnes and because of this, a large portion of working capital has been locked. Due to the lack of demand, buyers are also reluctant in placing orders.
"Our aim is to clear the stock as soon as possible," he said, adding that the company is looking for export orders to the Middle East and South East Asian countries