Mumbai: Steel sector’s demand driving segments, infrastructure, construction and real estate are likely to remain subdued in the first half of FY21 with strict lockdown measures during the June quarter and the monsoon season over the second quarter, as against growth expectations.

“With all hopes pinned on the domestic market revival for the steel sector, the worries are far from over. Despite a number of domestic user industries showing strong demand trends, demand from some segments are likely to remain subdued,” said EY in a sector report titled Securing a robust and sustainable future for the Indian Steel industry, published on Friday.

Speaking at the launch of the report, Saurabh Bhatnagar, Partner and National Leader, Metals & Mining, EY India, said “Domestic demand will remain subdued until sectors such as auto, infrastructure, real estate construction, electronics and consumer durables post a sustained recovery.”

Consumption of long steel products, primarily used in buildings, construction and capital goods sectors are expected to have a faster recovery as compared to flat steel, where the demand is consumer-driven through end user segments like automotive and domestic appliances, he added.

As per EY, apart from infra, the real estate sector too is witnessing a demand slump due to excess inventory and severe price pressures. Auto sector has also witnessed stagnant growth, resulting in lower demand of steel.

“The auto sector is caught in cyclic downturn, uncertain demand sentiments and uncertainty regarding electric vehicle launches and higher environmental standards,” the report said.

Furthermore, major government infrastructure projects are likely to get delayed as a direct fallout of COVID– 19 impact, the report said.

 

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