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India lockdown: Steelmakers cut domestic output; affects overseas production

Singapore — Several of India's steelmakers have confirmed that they have scaled down production due to the 21-day nationwide lockdown effective March 25 to stem the spread of the COVID-19 pandemic, as well as that of their overseas interests, if any.

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Tata Steel, one of the country's leading steelmakers with 33 million mt/year of crude steel output, said on Wednesday that it will be "reducing operations at some sites."

It said that "the company's mining operations have been operating normally but the integrated steel facilities in Jamshedpur, Kalinganagar Angul (Tata Steel BSL) and Gamahria (Tata Steel Long Products) have started reducing production levels and operations in the downstream facilities have been suspended and put on care and maintenance mode."

Other local steelmakers, such as the Steel Authority of India Ltd, or SAIL, had cut runs by 30%, industry sources said.

Jamshedpur has about 9.7 million mt/year of production capacity, while Tata Steel BSL operates a 5.6 million mt/year steel plant at Odisha, east India.

In February, Tata Steel produced about 1.10 million mt of crude steel, and assuming a 30% cut in run rates would equate to an output loss of more than 330,000 mt/month.

The pandemic has also affected its overseas operations as Tata Steel Europe has reduced production at some of its European mills. Tata Steel Long Products has a production capacity of 360,450 mt/year of sponge iron.

"Tata Steel Europe is currently operating all four blast furnaces at a reduced level across the two steelmaking hubs -- in Ijmuiden in the Netherlands, and Port Talbot, Wales," its parent company said. The European unit has a production capacity of 12.3 million mt/year.

Uttam Value Steel said on Wednesday that it has cut its production at its integrated steel plant located at Maharashtra due to a country-wide lockdown.

"Considering the evolving scenario of complete lockdown announced by the central government, the manufacturing operations at our plant located at Bhugaon Road Wardha in the state of Maharashtra has been temporarily ramped down," it said.

Uttam Value's plant at the location has a production capacity of 1 million mt/year for hot-rolled coil/sheet/plate and 225,000 mt/year each of cold-rolled products and galvanized coils and sheets.

Global steelmaker ArcelorMittal said it has reduced production and temporarily idled "steelmaking and finishing assets, adapted on a country by country basis in alignment with regional demand as well as government requirements."

ArcelorMittal owns a 60% stake in ArcelorMittal Nippon Steel, which has a crude steel production capacity of 9.6 million mt/year, centered in Hazira, Gujarat.

Elsewhere, ArcelorMittal will temporarily shut Blast Furnace A at its site in Austurias, Spain on May 7 as most of its customers have suspended production due to the pandemic.

Crude steel production in India totaled 9.56 million mt in February, data from the state-run Joint Plant Committee showed, which assumes that a 30% cut works out to be about 2.87 million mt of lost production.

CRISIL's Isha Chaudhary said that "the concern emerges from (the) demand side -- construction, automotive, and capital goods. Lockdown has resulted in limited construction and shutdown for auto and component plants. This shall therefore result in steel production cuts in coming months as there is limited offtake."

CRISIL, majority owned by S&P Global, is a global analytics company providing ratings, data, research, analytics and solutions.