Steel stilled: CRISIL Report

Steel stilled: CRISIL Report

Cushioning near-term blow attains priority

The extended lockdown to contain the Covid-19 pandemic has dealt a telling blow to the steel industry. With construction and manufacturing brought to a standstill and return to normalcy a distant proposition, the industry’s prospects have dimmed in line with the economy at large.

CRISIL Research conducted a focused survey of senior management teams of major steel companies and industry experts to gauge the extent of damage to the sector and glean a sense of what lies ahead.

The responses indicate a revival in demand is more than a quarter away.

The survey has, however, helped understand how the industry is coping with the challenging investment climate, addressing risks and pivoting strategies in the near term.

Key takeaways

  • Steel manufacturers are focussing on managing liquidity and cash flows in the near term to tide over an estimated contraction of 60-65% demand in the first quarter of fiscal 2021.
  • 75% of respondents indicate extending support through incentives and extended credit cycle to MSME and downstream sales channel players, to ensure their business continuity.
  • More than 35% of industry respondents anticipate a demand contraction of over 15% for the fiscal, with the free fall arrested gradually. Indeed, 60% of the respondents expect demand to recover in third quarter.
  • The anticipated demand destruction has resulted in steelmakers taking a cautionary stance towards capital expenditure, with more than 75% respondents planning to either delay or altogether shelve their plans.
  • The respondents believe incremental government support towards facilitating exports, along with tax and logistics concessions, can help them tide over this crisis.

To read more please click here

About The Author

Related posts

Leave a Reply

Your email address will not be published.