Coronavirus outbreak and lockdown impact weighs on steel industry

Apart from curbs on manufacturing units, the clampdown on logistics was taking a toll on operations.
The outbreak of COVID-19 and a lockdown to prevent the spread are threatening to impact production of steel companies.

Tata Steel is closing down its downstream standalone units in Maharashtra and Uttar Pradesh in line with guidance from respective states. The main sites at Jamshedpur, Kaliganagar and Angul, however, are operational, as they are process plants and hence have permission from local authorities, said sources.

One of India’s largest steel makers, Tata Steel’s consolidated crude steel production capacity is at 19.6 million tonnes, with manufacturing facilities in Jamshedpur in Jharkhand, Kalinganagar and Dhenkanal in Odisha, Sahibabad in Uttar Pradesh and Khopoli in Maharashtra.

Apart from curbs on manufacturing units, the clampdown on logistics was taking a toll on operations.

A spokesperson for ArcelorMittal Nippon Steel India (AM/NS India) said production was impacted because of COVID-19 issue, lower demand and curtailed logistics.

AM/NS India’s main plant is at Hazira and has a downstream facility in Pune. AM/NS India has an achievable capacity of 8.5 million tonnes.

Jindal Steel & Power Managing Director V R Sharma said JSPL plants were all currently operational, however, if the situation continued for more than a week then it might impact production. JSPL is expecting to end 2020-2021 with a production of around 8.5 million tonnes.

One of the main issues that has cropped up from the lockdown is that 80-85 per cent of trucks are not moving which is impacting despatches.

Sharma explained that on the incoming side, while raw materials like iron ore, coking coal were moved to the plant by goods trains, smaller items like consumables and spare parts, etc. were moved by trucks. Finished goods could be transported by trains but the problem is that from the train to user industry, it would have to use trucks, he added.

 “We are therefore requesting the government to allow movement of trucks for the industry. Trucks are a part and parcel of industry. Otherwise, we could head for a major slowdown,” said Sharma. “Industry is the backbone of the country. It must work,” he said. Sharma suggested that the working hours could be regulated and plants could operate with 50 per cent workforce and adequate precautions.

Regulating hours, however, would mean an impact on production. “But at least minimum break-even will be achieved,” Sharma said.

At one end, steel companies were facing logistics issues, at the other, demand was lower as most of the user industries were reeling from the impact of the lockdown. Many automakers had suspended production indefinitely in the wake of the virus outbreak. Construction, too, had come to a standstill, said an industry source.

Auto accounts for 15-16 per cent of steel usage while construction and infrastructure around 60 per cent.


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel