Although the Indian government has put steel production under the heading of essential services and exhorting steel companies not to cut production, private sector steel producers in India have started cutting down capacity utilizations in face of the threat of the Covid-19 virus and the national lockdown imposed by the government since March 25, officials at Indian steel companies have said on Thursday, March 26.
It has been reported that private integrated steel mills in India focused on flat steel production will cut utilization rates down to 20-30 percent and suspend operations at those units at which it is possible to continue operations without huge financial losses. At the same time, long steel manufacturers, some of which are state-owned mills, have not announced production cuts yet.
JSW officially announces large production cuts
JSW Limited, with an aggregate production capacity of 18 million mt per annum from steel mills located across the country, had shut down operations at one blast furnace at its Vijaynagar steel mill in southern India and has reduced capacity utilizations its other steel mills, a company official said. “Following the clarion call given by our honourable Prime Minister on 24/03/2020 for a 21-day nationwide lockdown (with effect from March 25, 2020) and the various advisories/directives issued by local Municipal Corporations, State and Central Governments considering the evolving scenario of a complete lockdown with exception to certain specified essential activities, the manufacturing operations in all of our locations have since been either scaled down or suspended (in certain locations). Consequently, the capacity utilization is expected to go down significantly during this period of lockdown,” JSW said in to report to Bombay Stock Exchange.
Other major flat steel producers also forced to drop outputs
An official at Tata Steel has said that the company’s steel mills in Jamshedpur and Kalinganagar accounting for an aggregate production of 20 million mt per annum had both cut down production by 70 percent over the last two days. He said that hot metal production and slab casting are expected to continue, while all rolling operations will remain suspended until further notice.
ArcelorMittal Nippon Steel India Limited (AMNS), (formerly Essar Steel), operating a port-based steel mill in the western state of Gujarat, will cut down its production utilization rate to 20-30 percent for crude steel, a company official has told SteelOrbis, adding that the actual situation in the market will become more clear in the coming few days. “This should help prices as well,” he said.
Long steel producers assessing situation, no confirmed shutdowns
JSPL, a leading long steel manufacturer in India, has said that the company "was still assessing the situation and no decision on a production cut has been taken yet," SteelOrbis has learned. But it might change over the next few days, sources said.
However, government-run Rashtriya Ispat Nigam Limited (RINL) in a statement has said that its 6.5 million mt per annum steel mill in the southern Indian port town of Vishakhapatnam has been maintaining production levels since the national lockdown was announced and all precautionary measures against the spread of Covid-19 have been taken and non-executive staff in non-operational areas have been directed to work from home.
An official spokesperson of another state-owned integrated steel mill SAIL has told SteelOrbis that there has not been any production cut at its Bhilai plant yet. But nothing can be said for the future as things are changing every day, the official added.
Tata Steel, JSW, AMNS, Jindal Steel and Power Limited, SAIL and RINL together account for about 50 percent of India’s domestic installed steel capacity of 140 million mt per annum.