Domestic steel output to take hit as plants divert oxygen for medical use

Consumption seen falling in line with production as auto, consumer durable goods demand tanks

While the domestic steel demand is expected to take some hit due to the ongoing second Covid-19 wave, production of the commodity is also expected to align itself to the consumption pattern as players divert oxygen from its plants to meet the urgent medical requirement of various states.

“Steel production is bound get impacted since the oxygen used in the making of steel is getting diverted for medical usage but life cannot have less priority with rest to production,” said a source with AM/NS India on condition of anonymity.

AM/NS India is supplying about 200 tonne of oxygen daily for medical usage for covid patients.

“About 28 oxygen plants located in the steel plants of both public and private sectors are supplying about 1,500 tonnes of medical oxygen daily. A stock of 30,000 tonnes including the safety stock, is being made available for medical use,” the Ministry of Steel informed via its twitter handle.

Sajjan Jindal-led JSW Steel, from its Dolvi plant in Maharashtra is supplying 185 tonne of oxygen daily to the state government. Among the states across country, Maharashtra is the worst hit due to the second Covid wave with Mumbai heading the list among metros.

“Covid-19 has started spreading again and we need oxygen for saving lives. Oxygen is the raw material in steel plants and at this crucial time, we have committed to the government to prioritize saving lives over steel making,” said Jindal via tweet last week.

Since the beginning of the pandemic, steel plants have supplied over 130,000 tonne medical oxygen, informed the steel ministry.

“Tata Steel’s response has been proactive to the increased demand for liquid medical oxygen and the company has been supplying as per the requirement given by various state governments,” informed the Tata Steel spokesperson.

Meanwhile, the domestic steel industry is gearing up for a slightly muted demand as auto and consumer durables segments are expected to take a hit going ahead.

“Demand from auto and white goods are not expected to pick up. It will not a be a situation as bad as last year since both companies and consumers have kind of learned to tide over the situation, but overall it will be a muted demand atleast in the large cities,” said P. K. Sen, secretary general at Institute for Steel Development and Growth (INSDAC).

Demand for steel from infrastructure projects led by the government will, however continue, said industry officials.

In terms of demand trends, rating agency ICRA said that contraction in domestic steel consumption has been much lower at 9.9 percent in 11M FY2021 compared to a 19.6 percent drop witnessed during 8M FY2021 on the back of a sharp pullback in demand during December 2020 and January 2021.

“Even this year, demand from rural areas and from small cities and towns will be relatively higher compared to metros as the pandemic has not had much impact in those areas,” informed Sen.

Automobile (auto) sales across segments in India — the world’s fifth largest market — slipped to a six-year low in the year ended in March, auto industry body Society of Indian Automobile Manufacturers (Siam) said last week.

Auto companies are now readying for yet another tough year — the third in a row — amid the raging virus and restrictions.

As per Joint Plant Committee data, India’s finished steel production during Apr-Feb FY21 declined 10.3 per cent on year-on-year basis to 85.6 million tonne, with imports sliding 33 per cent and consumption dropping around same level as production at 9.9 per cent to 84.6 million tonne.

Steel exports, however, rose 22 per cent in the period under review to 9.4 million tonne.

“Companies will align their production levels with the demand and we don’t really expect a major demand-supply gap this fiscal,” informed Sen.

HOW STEEL MAJORS ARE MEETING DEMAND

• Tata Steel is supplying 200-300 tonnes of liquid medical oxygen to state govts and hospitals daily
• JSW Steel is supplying 185 tonnes on a daily basis from its Dolvi plant in Maharashtra
• AM/NS India is supplying 200 tonnes a day to medical facilities in Gujarat
• SAIL has supplied more than 33,000 tonnes of LMO since April 2020