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Indian steel producers are raising capacity utilisation to 80-90pc in June, as India unlocks Covid-19 restrictions in phases.
Following the Covid-19 lockdown that began on 25 March, Indian mills operated in April at suboptimal levels of below 50pc to keep their blast furnaces running because of the high shutdown costs.
JSW Steel increased capacity utilisation in May to an average of 83pc from 38pc in April. JSW could raise utilisation to 90pc in June, given its rising competitiveness in export markets, said a Mumbai-based analyst, with Jindal Steel & Power, Sail and Tata Steel also running at 80-85pc of capacity.
Indian mills have moved their focus from the domestic market to exports. "Despite export prices being less remunerative, shoring up balance sheet liquidity assumes a higher priority for steel mills to tide over these challenging times," said a report by India-based research agency Icra.
Indian-origin hot rolled coil (HRC) of SAE 1006 grade was being offered at $438/t on 1 June, while offers this week for domestic HRC are at 37,000 rupees/t ($490/t).
Smaller India steel producers operating electric arc and induction furnaces are unable to resume operations because of a lack of transport and manpower and may be unable to resume soon. They make up half of India's steel melting capacity. Blast furnace operators will be able to capitalise on the rise in domestic demand because of this lost tonnage.
Construction steel demand picked up in May as lockdown restrictions were being eased in a phased manner, allowing for state-funded construction projects to restart.
The pace of building infrastructure projects has picked up so progress can be achieved before monsoon rainfall hinders construction, the Mumbai analyst said. Steel demand for tractors and farming equipment typically picks up in the June-October monsoon season.
Source: Argusmedia
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