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According to Bloomberg, an outbreak of coronavirus is likely to exacerbate the decline in steel demand in India, as the country has been moving towards slow economic growth in more than a decade.
Consumption should plummet in the current quarter, when demand usually peaks, as the virus leads to blockages and potential delays in new construction and the acquisition of more expensive products such as cars and homes, said Vishal Kulkarni, Executive Director of Nomura Holdings Inc. in hong kong. This can increase stocks at factories.
“Demand is likely to slow down by about a quarter, but in late May and June we will see that activity is returning to a relatively normal level,” Kulkarni said in an interview. “However, we could see steelmakers participating in this weak demand as an opportunity to carry out unplanned maintenance.”
Domestic steel consumption grew by only 3.8% in the 11 months to February 2020, after rising by 7.4% in the corresponding period last year, according to the Ministry of Steel. Prime Minister Narendra Modi’s administration is under pressure to shield the $ 2.7 trillion economy. from exposure to the virus, as it moves toward the slowest growth rate since 2009. The federal government has asked states to provide home work for all private sector workers, with the exception of the emergency and core services of the state press information office, the statement said.
According to Vishal Chandak, an analyst at Emkay Global Financial Services on March 18, the large workforce at key steel mills makes them vulnerable to an outbreak. Although the companies took precautions, “given the fact that thousands of people work together in such places, we fear any outbreak of Covid-19 that could have serious consequences,” he said.
Public Administration for Steel Steel of India Ltd. has developed emergency plans to manage all critical operations in its factories and offices, and has taken various preventive measures, including restricting travel for its employees, the statement said, without specifying whether production would be affected. It is already clear that small steel will be affected companies and the overall forecast for the steel sector remains cautious.
