With almost no warning, the Indian government imposed a nationwide lockdown on March 25 to curb the spread of COVID-19. Only essential services such as banks (and even then with reduced operating hours), grocers and pharmacies have been allowed to remain in operation.
Although industries such as stainless steel production could apply to operate during the lockdown under the Essential Services Act, this possibility is seriously undermined by the fact that: many employees would not be able to reach factories owing to transportation shutdowns; and availability of products/parts necessary to run plants is limited. Given that courier services were also shut for three weeks, vital banking and shipping documents could not be delivered. Stainless steel production, especially that based on imported scrap, basically ground to a halt.
On April 20, on what was supposed to be the last day of the initial lockdown, the Indian government relaxed some restrictions by creating Green, Amber and Red zones, depending on the number of COVID-19 cases. In Green zones (typically rural, agricultural areas), activity will begin to resume in a phased manner; in Amber zones, only limited activities such as public transport and harvesting will be allowed; but in Red zones, there must be a continuation of the strict lockdown measures as initially imposed. Social distancing rules must be observed in all allowed activities.
Most stainless steel mills are located in Red or Amber zones. Even with permission to operate under the Essential Services Act, whereby certain provisions are mandatory such as social distancing, hygiene protocols and reduced staffing levels, operating in a zone that is basically in full lockdown is challenging to say the least. Stainless steel production during the lockdown period is estimated to have been reduced to only 25-35% of normal capacity.
Prime Minister Narendra Modi has stated that the lockdown will remain in place until May 3. Hopefully, these extended measures will reduce the infection rate as India will clearly need to ease the lockdown to save the economy and the livelihood of its people.
Nimomet LLC (ARE)