Editorial – June 2022
Since many years, ‘Steelworld’ has been following the tradition of publishing an annual issue and I am very happy to hand over a copy of the same for the year 2022.
The last year was indeed a very eventful year for the global economy as well as for the iron & steel sector. By June 2021, good amount of covid vaccination was already done and the pandemic too had almost calmed down. The global economy, which had suffered a tremendous jolt during the previous year, had gradually started to stabilize. The logistics disruptions started getting corrected. The situation in iron & steel sector was no different. The steel demand, which had substantially dipped during the previous year, started heading north. Raw material and finished steel linkages were getting re-established. Overall, the situation and also the industry sentiment was heading towards normalcy and suddenly it happened !
As such the relations between Russia and Ukraine, for various reasons, were strained since a long time and the situation was gradually heading towards a war. Finally Russia started full scale military operations in February 2022 and again the global economy so also the iron & steel sector got destabilized. Ukraine was a big exporter of semi finished and finished steel to the world which suddenly halted. Also due to war, logistics (sea routes) of many raw materials got affected which resulted in decreasing the availability and increasing the prices of raw materials. Further, the movement of finished steel got disturbed due to some sea routes getting blocked by the war situation. All this naturally affected the steel demand which started moving downward. Thus with increased prices and reduced demand, the steel industry was again seen in an unstable and vulnerable situation. As such the war is being fought between only two countries, Russia and Ukraine, but many countries are politically involved in it and yet many other are being economically hit by it. This prompted many governments to take measures to protect their own industry and the markets. Indian government too has introduced new export duty structure in order to increase the availability of steel in the domestic markets and also to reduce the price to some extent. I think both the objectives were more or less achieved.
Now the situation has gradually started normalizing. Even if the war has not yet ended, the world including the steel industry has learnt to live with it. Also the experts are predicting that it will soon end. Their hypothesis is that Europe can not fight the winter without Russian gas and has to make truce. Ukraine has exhausted its resources and even Russian economy has started going down. Of course there are many more dimensions to this issue but ending of war seems the only solution to come out of this difficult situation.
Let’s see how the situation unfolds !