Amid ongoing concern of rising imports from FTA countries and China, and a double-digit domestic demand for steel, India’s mills have flattened out on production of the alloy (finished steel), with some indicating possible production pull-backs on account of maintenance activities.
Government data and other information collated by businessline through market sources show that some of the large integrated steel players have either reported flattish or less than 2 per cent y-o-y production growth for the 10-month-cumulative period of April-January of this fiscal.
India’s finished steel production was at 120.5 million tonnes, up 5 per cent; but driven primarily by the “other steel maker categories” and JSPL’s 20 per cent jump in numbers.
The larger mills — which account for nearly 55 per cent of production in the country — cumulatively saw a 1.3-odd per cent y-o-y rise at 65.8 mt while others (smaller & secondary ones) increased production by nearly 10 per cent to 54.7 mt. Comparative period production numbers were 64.6 mt and 50 mt, a Steel Ministry report shows.
For instance, PSU major SAIL saw April–Jan period production at 13 mt, down 3.5 per cent; while Tata Steel and JSW Steel — the two largest private players — saw production at 17.8 mt (up 1.5-odd per cent vs 17.5 mt, a year-ago) and at 19.4 mt levels (y-o-y). AMNS India saw production at 6.2 mt down, 1.3 per cent versus 6.3 mt a year-ago; while JSPL saw production increase to 5.8 mt (vs 4.8 mt).
Research firm BigMint in a report said its composite steel index moved up 0.9 per cent week-on-week to 130.7 point, driven by reports of supply constraints.
Supply and price
“Supply shortages, especially in North India pushed up prices (of HRC) despite demand remains comparatively subdued,” the report mentioned.
Supply shortages come when “unconfirmed reports of production cuts by leading steel makers are swirling in the market”, the report stated. “The prevailing crunch may have been an artificially created drive by pressing need among steel makers to temporarily pause the steady market downtrend,” it added.
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Steel-makers have not officially announced any scheduled maintenance activities or production cuts.
Two steel makers told businessline that there are individual issues at their mills which led to flattening of numbers. Another said, it has added capacities but is operating at lower levels.
The supposed shortages saw price of hot rolled coil prices move up by ₹800 per tonne to ₹48,000–50,000 per tonne levels in February; while cold roll coil prices increased by ₹600 per tonne to ₹53,500–56,000 per tonne levels, it mentioned.
Strong demand
Demand has been good so far in India. Consumption was at 125 mt for the 10-month period, indicating a near 12 per cent growth.
If government numbers are to be looked into, opening and closing stock difference was a negative 6,13,000 tonnes till January-end indicating lower stock levels on account of better demand.
As per BNP Paribas, NHAI has mandated the use of primary steel procured from producers with integrated steel plant in government projects. The new prescribed list of preferred vendors for the metal includes SAIL, Jindal Steel, Tata Steel, JSW and RINL. This could come in a shot in the arm for the sector.
“We note that in 9MFY25, the central government spent 66 per cent of the budgeted capex compared with 72 per cent in 9MFY24. …aggregate capex in these segments was down 1 per cent y-o-y vs a 6 per cent y-o-y growth in overall budgeted expenditure,” the research firm noted.
Trade deficit
India’s steel trade deficit stood at ₹36,524 core, with export of 4 MY of the metal — valued at ₹33,338 crore; and import if 8.40 mt of finished steel valued at ₹69,862 crore.
Imports exceeded exports by 4.4mt, with Korea being the highest supplier of the metal (import).