Editorial – November Issue 2021
The iron & steel industry now looks far more stable than around six months back. Actually the demand curve started moving up immediately after the start of 2021 but many feared that it is a temporary surge, may be due to saturated demand of the last year and may not sustain for a long time. The logic looked right, atleast at that time, but now after seeing the performance of the major steel companies for the last two quarters, one has to change his opinion. The performance curve is continuously heading north defying few support lines and now it seems that we are going to have a long bullish run.
What were the reasons for this slightly unexpected recovery of the steel sector ? Let us start from the beginning. Firstly, when there was a grave problem of labour migration during the first and the second pandemic wave, the steel industry actually did not suffer as most of the plants in the country are situated in the eastern side and the labour migrated from west to east. In fact our industry gained because of the extra availability of labour. Secondly, after complete lockdown for initial period, Indian administration handled the pandemic very smartly imposing partial lockdowns wherever necessary, opening up few regions, strictly imposing covid norms and above all, pushing and managing world’s biggest vaccination drive. It also gave away a huge package of Rs.20 L crores for the industry. All this helped the industry (including the iron & steel sector) to regain the confidence to sustain and move forward. Also the work of government infra projects was restarted after the first few months itself which actually helped and supported the steel demand to grow. Finally Indian entrepreneurs and professionals worked tirelessly taking the risk of life in few occasions. All this contributed to the strong position of our industry which we are witnessing today.
This situation is somewhat similar to 2008 when most of the developed world economies collapsed due to global meltdown and India did not suffer much. That was the first time India was seen as one of the very few growing economies at that time and was identified as a bright investment destination. Today also, after successfully fighting the covid battle, India has emerged as one of the best destinations for investment. With improved international ranking on ‘Ease of doing business’, Indian economy is expected to get huge support from overseas investing community. The steel industry would also gain from the higher GDP growth rate for India in coming years.
Some of the above may be my ‘wishful thinking’ but I sincerely believe that iron & steel industry professionals have to capability to make it a reality !