Having emerged victorious from last year’s nationwide lockdown, India’s steel industry is proving its mettle amidst a dire second wave of COVID-19.

Boyden's perspectives on the news and trends that are transforming industries

India’s steel industry already had its share of troubles when COVID-19 struck in March 2020, prompting a nationwide lockdown. This brought the industry to a standstill. Mumbai-based JSW Steel, part of Indian industrial conglomerate JSW Group, was forced to halt the expansion of its mill in Maharashtra state as 14,000 workers went into quarantine. “There was no market”, says JSW Group Chairman Sajjan Jindal.

JSW responded to the shutdown by immediately taking steps towards reopening, which involved some calculated risks. “I was eager to restart, so we did”, said Jindal. One measure, aimed at lessening the pandemic’s local impact, was to repurpose the schools and clinics the company runs into dormitories and COVID-19 treatment centres. It also added $1 billion to its debt. But within a few weeks, JSW was operational again.

Other Indian steel companies took a similar approach, and as The Economist reports, “By July domestic demand in India had begun to recover, as good harvests prompted farmers to buy new tractors.” In addition, construction picked up after the first wave. Restricted supply drove up prices, despite healthy demand in places such as China, Vietnam and parts of Africa. Globally, the pace of recovery in the steel industry was mixed. Operations in Japan, South Korea and Russia resumed more slowly.

Since then, the global steel market has come roaring back. Prices have nearly doubled in India, doubled in Europe and China, and more than trebled in the U.S. in the past year. Surveys by Mumbai-based brokerage firm Edelweiss suggest they will continue to rise. Tata Steel, part of one of India’s biggest and oldest industrial groups, is faring well even in Europe. Overall, the share prices of big Indian steelmakers have outperformed those of major rivals in China, South Korea and Japan.

Now, with the return of foreign competitors and a crisis-level second wave of COVID-19 buffeting the country, India’s steel industry is being tested once again. As of this writing, there are growing calls for another nationwide lockdown. Steel also faces a potential threat from the tide of history: Many countries are taking decisive steps to lower carbon emissions, which could include steel tariffs. But thus far, share prices in India and elsewhere remain high.

Indian steelmakers that can endure the current challenges may have new opportunities to seize. The greening of China could lessen Chinese steel production. Financial services firm Jefferies reckons that in 2022, China will import more than it exports. Supply could come from India. At the same time big infrastructure plans are in the works, notably in America, which could also opt to procure steel from India for its large-scale construction projects.

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