impact of COVID-19 Iron and Steel industries?
Answers
Answer:
The iron ore mining and steel sectors are limping back to normalcy after the Karnataka government last month allowed continuous process industries to operate. The mining of iron ore and manganese has restarted and the production has touched about 50% of the capacity, while the steel mills are struggling to regain their capacity.
NMDC Limited, India's largest iron ore miner, is operating one and a half shifts at its mines in Chhattisgarh and Karnataka. In the absence of the Supreme Court-appointed Monitoring Committee to conduct e-auction of iron ore, the company conducted auctions online last week.
Answer:
The COVID-19 has disrupted operations globally is well-known. Moreover, the new normal that will emerge is likely to witness a realignment of power centres in different domains. The coronavirus crisis has impacted almost all supply chains dependent on China, which includes the steel sector.
Even after the lockdown is lifted, most likely in phases, the steel sector will continue confronting sustained challenges on account of the labour shortage and hampered logistics movement. The nationwide lockdown is an unprecedented test for every sector, including steel.
In the past few days, hordes of migrant workers have been returning to their hometowns. After the harrowing time they faced for weeks during the lockdown, most are unlikely to return soon. As companies seek to ramp up production for making up lost time, shortfalls in human resources will hinder such goals. But this represents one of the myriad challenges only. With the monsoons around the corner, it will impede the industry’s faster return to normalcy.
The biggest barrier, however, is the collapse of demand from various industries. As most consumers have postponed discretionary spending, there is muted demand in all industries, barring essentials such as groceries and FMCGs. Be it white goods, capital goods, automobiles and a host of others, the demand from consumers has plummeted.
Also, demand bouncing back quickly to pre-COVID-19 levels is unlikely soon. As many verticals have laid-off workers, placed some on furlough or announced salary cuts, the overall consumer sentiment is against any spending, except on essentials. Considering that COVID-19 is expected to stay on as a seasonal flu, the prospects of an economic bounce back will be tempered accordingly. Consequently, individual and institutional spending are bound to remain lacklustre for a year or so at least.
Under such circumstances, it is up to the government to boost infrastructure investments across the country. This can become a key driver for India’s eventual economic recovery. Such infrastructure projects need to be fast-tracked for the steel sector to stabilise operations after the demand slump.
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