Lockdown hits India's bulks producers

Steel production and iron ore demand to fall by 19% and 16% year on year in June quarter.

India's secondary steel producers have been badly affected by COVID-19-related disruption, says Wood Mackenzie

India's secondary steel producers have been badly affected by COVID-19-related disruption, says Wood Mackenzie

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WoodMac's principal analyst Sandeep Kalia said supply chain issues "had hit secondary steel producers the most, forcing them to either scale down or suspend their operations due to issues with raw materials supply, limited workforce and holding-on inventories, as demand dries up," said.

The consultancy expects crude steel production to fall by 19% or 5Mt year on year in the June quarter.

Meanwhile, Kalia said merchant iron ore miners have curbed production "due to limited workforce, inter and intra state logistic issues and scaling down or suspension of operations by both integrated and secondary steel mills".

"Our current base case is changed to 39Mt iron ore demand in Q2 2020, which is a 7 Mt or 16% decline year on year," he said.

If the lockdown drags on until mid-May, WoodMac forecasts steel production could fall by another 5Mt in the June quarter, while iron ore demand could tumble by a further 10Mt.

Metallurgical coal production will continue during lockdown "as most of it is captive", but Kalia sees met coal imports falling by 15% or 2Mt in the June quarter "due to a decline in coke production, in line with a decrease in hot metal production and a slight drop in demand of coke by consumers other than steel mills". Met coal imports could fall by another 5Mt if the lockdown is extended, said WoodMac.

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