Editorial – July 2022
The last year was indeed a very eventful year for the global economy as well as for the metal sector. By June 2021, good amount of covid vaccination was already done and the pandemic too has almost calmed down. The global economy, which had suffered a tremendous jolt during previous year, had gradually started to stabilize. The logistics disruptions started getting corrected. The situation in metals sector was no different. The metal demand, which had dipped during the previous year, started heading north. Raw material and finished product 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 were strained since a long time and the situation was gradually heading towards a bigger crisis. Finally Russia started full scale military operations in February 2022 and again the global economy so also the metallurgical sector got destabilized. Ukraine was a big exporter of semi finished and finished steel and other metals 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. Also the movement of finished products got disturbed due to some sea routes getting blocked by the war situation. All this naturally affected the metal and metal product demand which started moving downward. Thus with increased prices and reduced demand, the metals industry was again seen in an unstable 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 domestic 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 metals 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 such a difficult situation.
Let’s see how the future unfolds !