The second wave of the pandemic has hit domestic steel demand in the current year, with a 22 per cent M-o-M drop in April 2021, and a further 1% sequential decline reported in May 2021. However, the current year consumption data looks far better compared to last year (150 per cent growth in April-May 2021) because of the much more stringent lockdowns observed during April-May 2020. Despite weak domestic demand, buoyant international demand and steel prices supported the domestic steelmakers and India remained a net exporter of steel with 122 per cent Y-o-Y growth in exports reported in April 2021.

Although exports in April 2021 were 26 per cent lower than the March 2021 levels, the export momentum continued in May 2021 with a 30 per cent M-o-M growth. With the gradual lifting of lockdowns/mobility restrictions in India in June 2021 and improving vaccination coverage, ICRA expects domestic demand to recover in the coming months, which in turn would result in a pick-up in capacity utilisation levels.

Elaborating on this, Jayanta Roy, Senior Vice-President & Group Head, Corporate Sector Ratings, ICRA, said, "The key reason behind supportive international demand and prices has been China, which reported a 19.9 per cent and 21.6 per cent growth in fixed-asset investment and real estate investments respectively during 4M CY2021. China's export hot-rolled coil (HRC) price shot up by 53 per cent to $1065/MT during January-May 2021 before correcting to $945/MT in the first week of June 2021, following the Chinese Government's clampdown on financial markets to rein in price speculation."