Rashtriya Ispat Nigam Limited (RINL) has set an approximate sales target of 5 lakh tonnes for November, 2020, in which the domestic component will be more than 3 lakh tonnes, with exports aimed mainly to keep the cash flow going, sources informed.
The sources observed that there were export orders in October and there will be more such consignments in November too but the major chunk of these will be regular semis with a small portion of finished goods that is being carried over from last month into November.
“The export component at present is only to keep the cash flow going. Some of these are carried over consignments from the previous month as well. Domestic demand being much higher at present, RINL’s primary focus will be on this market now,” a source told SteelMint.
Meatier domestic margins
The steel PSU, which is the holding company of Vizag Steel Plant (VSP), like all other mills, is focusing on the domestic market at present because of meatier margins in this space. The margins are also better in finished value-added products exports but these comprise barely 10-20% of RINL’s consignments, the major portion being regular billets.
Domestic prices are showing an uptrend. November saw a price hike of INR 1,200-1,300 per
tonne across all product categories. Raw material prices have been rising on scarce supply, especially from Odisha. The steel price hike is not just supported by domestic demand but is also a function of high raw material prices.
At present, domestic sales are fetching the mills at least $30-35/tonne more, strengthening the case for a stronger domestic focus. On the other hands, last deals from India were concluded at around $420-425/t fob.
However, for a player like RINL, which is located on the coast, selling even at $420/tonne fob would give it higher realisations compared to mills located in the hinterland – like SAIL, Bhilai or even JSPL, Raigad. The freight cost for a port-based player, when delivering to its markets, say in northern India, will be higher and thus it may find it more viable to export compared to other major steel producers. Hence, RINL’s overall exports share, under normal circumstances, would be higher than that of other major mills like Tata Steel, JSW Steel, JSPL etc.
Lower Oct sales
It may be noted that RINL’s November sales target, at 5 lakh tonnes, is around 16% higher than October’s 4.3 lakh tonnes. However, actual sales in the previous month were lower from the target, at 3.33 lakh tonnes, in which the share of exports was at a mere 0.7 lakh tonnes. Its export volumes would have touched its habitual over 1 lakh tonnes per month. However, the mill was unable to deliver all consignments due to some “unforeseen issues”. Hence, November is going to see a roll-over of some volumes from October. And this can push up the current month’s export sales quantities to over 2 lakh tonnes.
Production
RINL’s liquid steel production in October was at 3.9 lakh tonnes, slightly higher than September’s 3.78 lakh tonnes. It may be noted that the third blast furnace which was reignited on October 18, is running at a little more than 50% capacity, churning out around 4,000 tonnes per day of hot metal. It will reach its peak rated capacity of a little over 7,000 tpd gradually.
~ By Madhumita Mookerji
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