With a 30% drop in state-run SAIL’s finished steel outut, domestic production of the alloy fell an annual 3% to 7.3 million tonne (MT) in August, even as domestic consumption increased marginally by 0.8% fed also by a 17% tise in imports. During April-August this year, India produced 38.5 MT of steel, just 0.6% higher than the same period a year ago.
To address the sudden surge in imports, the government has recently imposed a 20% safeguard duty on key primary steel items. Imports in the first five months of the current fiscal grew close to 51% to 4.5 MT, according to the data released by the Joint Plant Committee (JPC) attached to the steel ministry.
As per the JPC data, Tata Steel also reported a 0.9% drop in production during August. However, other integrated producers such as RINL, Essar, JSW and JSPL clocked positive growth. Mini steelmakers, which contributed 4.2 MT steel to the total production kitty in the month, also reported a 4.3% drop in production.
SAIL’s finance director Anil Kumar Chaudhury attributed the drop in production for the month to a planned shutdown for maintenance in its Bokaro plant, which generally produces around 3 LT steel a month. He said the unit would start full-fledged production within a week.
Production of SAIL, which reported over Rs 300 crore loss in the first quarter of the current fiscal, was also down during the April-August period of the current fiscal by 5.3% to 3.95 MT. Another state-run firm RINL was the only other steelmaker among the major producers to report a decline in production during the period.
While subdued domestic demand, which grew by just 0.8% in August this year compared to the same month a year ago, was one of the primary reasons for the fall in production, the plummeting price of the alloy could be the biggest block for the steelmakers to run their plants to full capacity, an industry source said.
According to data compiled by JPC, price of HR coil, the benchmark steel product, fell by nearly Rs 6,000-9,000 a tonne during the last 12 months to stand at Rs 37,000 per tonne now. The price of angles and channels also dropped in that range.
However, the import trend seems to be arrested a little. It grew by 17% during the reporting month at 0.92 MT compared to the same month last year. The government had raised import duty twice by 2.5% each in June and August to take it to up to 15%.
Overall production for sale for the April-August period remain near static at 38.52 MT, imports surged by 50.8% at 4.52 MT while exports fell by 28.1% and consumption saw a 4.6% rise to 33.02 MT.