External demand for Indian steel recorded a significant increase, with steel supplies from China faltering due to the repercussions of the spread of the new mutant Corona virus (Covid-19).
Bloomberg indicated that China is the largest producer of steel in the world, and represents more than half of the global production of it, adding that the new Corona virus crisis led to a decline in demand for steel in China, which led to the stock of steel reaching a record level, with the faltering return of migrant workers, who represent a large portion of the labor force in the construction and truck driving sectors in China as a result of the restrictions imposed by the Chinese authorities on travel between regions in order to contain the virus.
Bloomberg reported that exports of Indian steel companies increased during the current year, with domestic demand continuing to weaken in light of the slowdown in growth of the Indian economy to its lowest levels in more than six years. According to data from the Indian Ministry of Steel, India's exports increased by 40 percent during the ten months until last January, reaching a level of 7.2 million tons.
Ranjan Dhar, marketing director at ArcelorMittal Nippon Steel, said that the outbreak of the new Corona virus “gave steel manufacturers in India an opportunity to benefit from China’s traditional markets in which Indian companies are already present,” adding: “It is important to note that the flight time from India to these markets is equal to or less than its time from China.” Vietnam, Italy, Nepal, the UAE and Saudi Arabia were the largest markets for Indian steel exports last January.
Dar stated that “any exports will take place after the domestic demand is fully met” and that “it is not only steel exports (that benefit from the faltering Chinese exports) but also that exports of automobile components from India could be the solution to the problem of the disruption of supplies of these components coming from China.”
Indian steel companies also expect a decline in their country's steel imports from China, South Korea, and Japan, as they are among the countries affected by the spread of the new Corona virus, which has led to an increase in prices in the local market despite weak demand, according to Jayanta Roy, senior vice president at ICRA, an affiliate of Moody's, an economic consultancy.