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India lockdown: Private steel mills cut output by nearly 70%

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India lockdown: Private steel mills cut output by nearly 70%

Singapore — Major Indian steel mills have responded to the 21-day national lockdown to combat the spread of coronavirus with drastic cuts in production.

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While the Indian government invoked the Essential Services Maintenance Act 1891 on Tuesday to allow continuance of operations for steel and mining operations, mills may have decided to reduce production in view of the market conditions with trading likely to grind to a complete halt until April 15. The act lists any service in the establishment or undertaking or dealing with the production, supply or distribution of coal, power, steel or fertilizers as an "essential service."

State-owned companies including Steel Authority of India and Rastriya Ispat Nigam Limited were advised to refrain from cutting production through Ministry of Steel mandates.

JSW STEEL

JSW Steel, with a capacity of 18 million mt a year across various locations, was shutting down one blast furnace as its Vijaynagar plant in Karnataka on March 25, as well as reducing production rates in the other three to 50% on March 25 and 25-30% from March 26 onwards, a senior official at the plant said.

"All expansion and construction projects within the plant such as the GI line and CRM maintenance have stopped, because we do not want too many people inside the plant," he said.

The company has four blast furnaces with capacities of 900,000 mt, 1.3 million mt, 2.7 million mt and 2.7 million mt a year. The official, however, did not say which blast furnace was being shut.

The mill was also preparing for an additional two months delay to the ongoing maintenance in one of its strands at its Cold-rolled Mill Complex 1 at the Vijaynagar plant as Japanese supervisors left for their home country. The CRM1 upgrade was to change the strand from reversible to tandem and was planned to run only partially from January to May. Additionally, the company's expansion project of its Dolvi plant from 5 million mt-10 million mt/year was delayed until September.

"Exports are a big challenge today, not an easy game for any of us," a Mumbai-based source with the mill said.

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TATA STEEL

Tata Steel, with a consolidated crude steel production capacity of 19.6 million mt/year, cut production by 70% at its manufacturing facilities in Jamshedpur in Jharkhand as well as Kalinganagar in Odisha because of limited manpower, according to a company official.

Both the facilities were preparing for slab casting during the lockdown, with the rolling process planned to be undertaken afterward. While the mill might be inclined to sell slab, especially to markets like China, it was also seen preparing for pent-up demand that may arise after the lockdown eases.

"After the lock-down everybody would have cut production, and it would be a question of who has how much," a Mumbai-based mill source said. "So we would rather not take too much time to feed the market and that can be an opportunity."

Tata Steel's downstream units in Sahibabad, Uttar Pradesh and Khopoli in Maharashtra remained completely shut.

ARCELORMITTAL NIPPON

Port-based ArcelorMittal Nippon Steel India, with a rated capacity of 10 million mt/year, shut down its entire gas-based iron making process effective Wednesday, with the overall iron ore-making process cut by 70-80%, a senior official with the company said.

"It's a challenge to shutdown BF [Blast Furnace] and Corex so it's operating at lower levels," he said. "It's a risk burning cash and creating inventories during these uncertain times."

At the same time, AMNS India was seen as the most amenable to concluding export orders in overseas market given it is proximity to Hazira port in western state of Gujarat, where the mill is located.

"Vietnam buyers understand which Indian mill actually has the ability to service orders at this time," another Mumbai-based company official said. "By the time 21-day period ends, massive production cuts to the tune of 60-70% would have happened from India side which will support price."