Top Indian Steel Mill Sees Better-Than-Expected Demand Recovery

India’s steel demand has recovered faster-than-expected after plunging in the fiscal first quarter, as consumption in the rural sector revived, according to the nation’s biggest mill by market value.

Consumption slumped by more than half in the three months through June as economic activity ground to a halt after India imposed one of the world’s strictest lockdowns to contain the coronavirus pandemic. While demand in the second quarter is still down about 10% from a year earlier, it has more than doubled from the previous quarter, according to JSW Steel Ltd.

“There is a dramatic improvement and things are looking far better than what we all anticipated,” said Seshagiri Rao, joint managing director at JSW Steel, in an interview. “The sectors in which we were not expecting a big recovery so quickly is the auto sector, which has really done well,” and sales in other segments such as appliances, solar and coated products have also been good, he said.

JSW Steel’s retail sales volumes jumped 117% in the July to September period from the previous quarter earlier and also rose 13% from a year earlier, with rural demand being an important driver for the growth, he said.

“Whatever policy measures that have been taken, either fiscal or monetary, they are all targeted toward the rural sector or tier 2 towns,” he said, adding that restocking and credit availability have improved in these areas.

Still, full-year consumption will be 10% lower than a year earlier as about 15 million tons of demand was lost in the first half, he said.

Due to the sharp decline in demand, Indian mills more than doubled their exports to nearly 11 million tons during the first six months of the fiscal year, according to data in JSW Steel’s quarterly earnings presentations.