Crisil Foresees 17% Decline in Indian Steel Demand

SEATTLE (Scrap Monster): The most recent report published by the rating agency Crisil warns that Indian steel demand is likely to dip by 14% to 17% during the current fiscal. The forecast is after considering the impact of the second phase of the lockdown recently declared by the government.

The above is based on the assumption that construction and manufacturing activities will return to normalcy by the end of the first quarter. However, the spread of the virus would force the government to extend full or partial lockdowns through Q2. This in turn could have severe impacts on various steel-consuming sectors such as construction and automotive manufacturing. In such as case, Crisil foresees demand contraction to escalate further to 22-25%.

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According to Crisil, the contraction in demand is likely to push utilization level of domestic steel sector in the country to as low as 67-70%. This is considerably down when matched with the utilization level of 76% in fiscal 2020. The steel demand from capital goods segment is likely to witness further decline. The huge drop in demand is likely to further weaken steel prices, it added.

The ratings agency noted that no capacity additions are expected during the year, as the crisis situation has led to many major steelmakers postpone their capex plans.