Rashtriya Ispat Nigam Limited (RINL), the holding company of Vizag Steel Plant (VSP), has registered a steady increase in its crude steel production since June, 2020, as per SteelMint data. From an abysmally low of 1.62 lakh tonnes seen in May during the lockdown, crude steel production reached a high of 5.28 lakh tonnes in January 2021, which is a more than two-fold jump.
The January, 2021 production level was the highest recorded over the last one year for the steel PSU and a rise of more than 62% year-on-year over 3.24 lakh tonnes seen in January 2020.
The increase in crude steel output over this period was supported by a steady increase in demand since June last calendar till the year-end.
Sales drop
However, following the overall steel industry trend from January, RINL too experienced an almost -42% drop in sales at 2.72 lakh tonnes over the previous month’s (December, 2020’s) 4.71 lakh tonnes. In the total sales of 2.72 lakh tonnes, exports comprised a meagre 0.34 lakh tonnes.
A source within the company told SteelMint that one of the factors for the low offtake was the sharp increase in steel prices. There were hardly any takers at those elevated price levels, said the source. In fact, the day after the Union Budget, 2021-22 was announced, flat steel prices were hiked by INR 1,500 per tonne although TMT bars saw a drop in prices by around INR 3,500/tonne. Prices have been northward since June, last year.
Another factor, and which is a corollary to the above, was a pronounced silence from the construction sector in terms of lifting any material. In fact, the Minister of Road Transport & Highways (MoRTH), Nitin Gadkari, had drawn Prime Minister Modi’s attention to the 55% hike in steel prices during the past six months, which has affected viability of projects. The silence from the infrastructure and construction sector in terms of buying steel was almost like a reaction showing solidarity with the minister’s comment, indicating a market source, adding that sales are down particularly for long products.
Feb liquid steel target lowered
Consequently, keeping the subdued offtake trend in mind, the steel PSU has decided to keep an almost 10% lower liquid steel production target of 5 lakh tonnes in February compared to January’s 5.49 lakh tonnes. However, January’s output level was 5% higher compared to December, 2020’s 5.22 lakh tonnes.
RINL’s inventory levels have also more than doubled, month-on-month, to around 3 lakh tonnes by January-end against December, 2020’s 1.2 lakh tonnes, because of the sluggish sales scenario.
By Madhumita Mookerji
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