India: JSW Steel reduces capacity utilization rate to 91% in Apr ’21

Indian steel major JSW Steel The Indian private steel manufacturer reduced its capacity utilization rate to 91% in Apr ’21 as compared to 96% in Mar ’21, SteelMint learned from the company’s recent press release in BSE filings. Meanwhile, the company also witnessed a fall in other production segments.

Major highlights:

1.Crude steel output down 5% m-o-m-JSW Steel’s crude steel production for Apr ’21 was at 1.37 mn t, down by 5% as compared to 1.45 mn t reported a month ago.

2.Flat-rolled  production down 9% m-o-m-Flat-rolled steel production saw a decline by 9% to 0.96 mn t in Apr ’21 compared to 1.05 mn t in Mar ’21. However, the company raised HRC and CRC prices in Apr ’21.

3.Long-rolled drop 5% m-o-m-JSW produced 0.34 mn t of the material in Apr ’21, a decline of 5% over 0.35 mn t a month ago.

Reasons for decline in steel production:

1.Supplying liquid medical oxygen-Owing to priority given to the supply of liquid oxygen for medical purposes, the capacity utilization was lower compared to last month. During Apr ’21, over 20,000 tonnes(t) of liquid oxygen were supplied for medical purposes from all its plants. JSW Steel is supplying LMO(liquid medical oxygen) from its three manufacturing facilities based in Karnataka, Maharashtra, and Tamil Nadu to various other states across India to meet the requirements of hospitals treating Covid-19 patients.

2.Drop in demand amid lockdowns-As the number of coronavirus cases keeps rising, several states have announced stringent restrictions, including night curfew, while even mulling a total lockdown in their efforts to curb the spread of the virus. Various states namely, Maharashtra, Uttar Pradesh, Punjab, and Chhattisgarh are under lockdown and economic activities have been severely affected. Thus, lockdown impacted the company’s production.

Outlook-
The company is prioritizing oxygen supply to various states to help Covid patients. Thus, steel production will remain affected. This may lead to a shortage of material and might result in higher steel prices in the near term.