Steel firms mull production cuts amid shortage of workers

By: |
March 24, 2020 12:30 AM

The spread of coronavirus, coupled with rising threats of cheap imports from China, Japan and South Korea, has already kept the lid on domestic steel prices.

The crude steel production in earlier years was lower than the installed capacity as growth of domestic market could not keep pace with incremental addition to capacity.

Even as steel falls within the Essential Commodities Act, domestic manufacturers may soon have to resort to cut down on their current levels of production due to shortage of manpower and disruption in supply of raw materials.
Sources in SAIL said it would be working with minimum number of regular and contract workers and hence, there will be an inevitable production cut, though not immediately.

AMNS India (formerly, Essar Steel) said production has got impacted at its lone plant at Hazira in Gujarat due to shortage of manpower. “Only those living in the plant complex are reporting to duty,” said a company source. Lower demand and curtailed logistics also impacted production, he said.

The spread of coronavirus, coupled with rising threats of cheap imports from China, Japan and South Korea, has already kept the lid on domestic steel prices. In a recent report, Kotak Securities has projected a price cut of Rs 1,000-1,500 per tonne in the domestic market in the first quarter of FY21. Indian steelmakers have hiked prices by 15% for hot-rolled coils (HRC) since November last year to Rs 37,000 per tonne now.

JSPL’s managing director VR Sharma also said that there had been no disruption in the production yet at its plants, which are being run with less number of workers; but no wages to be deducted from the contract workers who have been asked not to report on duty. The company has also decided to roll over the prevailing prices in April.

Vizag-based Rashtriya Ispat Nigam (RINL) said there had been no disruption or pruning in the production as yet, till now and the company also does not foresee any production cut in the near future as a majority of its 18,000 contract workers were reporting on duty as usual. Raw material is also not a problem for the firm, a company spokesperson said.

Paying heed to the Prime Minister’s call, most of the companies, including SAIL and JSPL, which employ a large number of contract workers in their respective plants and mines, would continue to pay wages to all contract workers. Sources said SAIL employs around 70,000 contract workers while JSPL employs around 14,000 contractual/temporary/casual workers, as per its latest annual report.

Trilegal’s Atul Gupta said, “Steel companies which are today paying contract workers through contractors are mostly doing as per the government’s request, but whether they would to pay even the lockdown gets prolonged has to be seen”.

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