Sail Production Down 6% In Five Months

Chances of the Steel Authority of India (SAIL) reporting a profit for the first half of 2001-02 seem bleak with the public sector company reporting a six per cent fall in production in the first five months of the fiscal, compared with the corresponding period of the previous year, according to steel industry sources.

Total finished steel production at SAIL in the first five months of 2001-02 was 29.33 lakh tonne, against 31.22 lakh tonne manufactured in the previous corresponding period.

SAIL reported a 13 per cent fall in production in August against 633,400 tonne of steel manufactured in the previous corresponding period. The public sector firm had reported a six per cent production drop in July 2001.

The company is also losing out Rs 200 on every tonne of hot rolled steel manufactured. While the manufacturing cost of a tonne of HR steel at SAIL is Rs 13,000, the present HR prices allow the steel major to realise only Rs 12,800 per tonne of HR steel manufactured.

Steel prices have been declining from the last quarter of 2000-01 and have touched an all-time low.

Cost of ore at SAIL varies from $5.9 per tonne to $ 9.7 per tonne. Added to this is the freight cost (SAIL needs to transport ore to distances ranging from 300 km to 70 km). Transportation also takes three and half days on average. Interest and other costs make steel manufactured by SAIL costlier by Rs 1,000 per tonne than the same grades manufactured by Tisco.

Bhilai Steel reported a 13 per cent production cut at 10.92 lakh tonne of steel manufactured in the period under consideration. Bokaro Steel Plant reported a 5 per cent fall in production at 871.8 thousand tonne. Durgapur Steel Plant, and Rourkela Steel Plant, reported marginal production rise at one per cent and six per cent respectively, in the first five months of the current fiscal.

Although realisations at private sector steel major Tata Steel, has been squeezed, the company was getting a margin of Rs 800 per tonne of HR steel sold. Manufacturing cost at Tisco was around Rs 12,000 per tonne.