One of the largest private steel makers of India, JSW Steel, recorded a 13 per cent drop in crude steel production in August 2019.
In a filing with the stock exchanges, JSW Steel informed that crude steel production for August 2019 was at 1.25 million tonnes compared to 1.45 million tonnes in the same period last year.
Production of flat rolled products saw a decline of 13 per cent to 851,000 tonnes, while long rolled products dropped by 5 per cent to 291,000 tonnes.
JSW Steel said that the production was lower due to a planned shutdown at Vijaynagar works and severe monsoon impact at Dolvi works.
While JSW's manufacturing facility at Vijaynagar is the largest single location steel-producing facility in India with a capacity of 12 million tonnes, Dolvi works is in the last leg of completing expansion from 5 to 10 million tonnes. The expansion is scheduled to be completed by March-April 2020.
In July, JSW Steel had clocked crude steel production of 1.32 million tonnes, down by four per cent on a year-on-year basis.
Flat rolled products during the same period dropped by 8 per cent to 908,000 tonnes while long rolled products at 316,000 tonnes was, however, higher by three per cent. Though JSW's drop in crude steel production was due to a planned shutdown, the steel industry had been facing high inventory levels with the slowdown in user industries.
According to rating agencies, the outlook for the sector was expected to be weak for the remainder of FY20.
India Ratings and Research (Ind-Ra) has revised its outlook on the steel sector to stable-to-negative from stable for the remainder of FY20 on sluggish steel demand growth expectations owing to a mix of structural and cyclical concerns in end-user sectors, primarily auto and real estate construction.
Ind-Ra has revised downwards its FY20 steel demand growth expectations to around four per cent from the previous forecast of 7 per cent. The figure for FY19 was 8 per cent.
ICRA's latest report on the steel sector also said that the downward trend in profitability was expected to continue in Q2FY20, as steel margins would get further squeezed between weakening domestic steel consumption and a weak outlook for global growth amidst escalating trade war related tensions.