The raw materials cost push is keeping Rashtriya Ispat Nigam Limited’s (RINL’s) third blast furnace still idle, reliable sources informed SteelMint. It may be recalled that the third BF has been out of operation since end-Jan’22.
However, its two currently running BFs are producing around 15,000 tonnes of hot metal per day with one overshooting to touch 8,000 tonnes per day (tpd) last month against the peak rated capacity of 7,150 tpd. With one BF down, crude steel production in Feb’22 touched 0.37 million tonnes (mnt). RINL’s three BFs together have a crude steel peak rated capacity of 7.3 mnt per annum and 7.5 mnt of hot metal capacity.
“There are no issues with the third BF. We can resume it any time but the market conditions are not conducive at present for doing so,” a source informed SteelMint.
It may be mentioned that prices of steel and most of its raw materials in India have shown a sharp double digit increase since the onset of the Russia-Ukraine war on 24 Feb’22. Australian low-vol HCC coking coal was up a sharp 47% to $530/t within the fortnight since the onset of the war, breaching the psychological $500/t threshold in early March. Domestic met coke prices likewise spurted north, rising by INR 4,000/t around the same time.
Inventory depletion sustains
The PSU has sustained its inventory depletion trend for two months in a row. The closing stock in end February was 0.22 mnt, showing an inventory depletion of 32,000 tonnes m-o-m against January. It may be recalled January’s inventory was lesser by 80,000 t compared to Dec’21.
Sales
In February, RINL’s sales were at almost 0.40 mnt on the back of moderate domestic demand as government infrastructure projects approach deadlines. In January, however, RINL was upbeat on sales increasing by 40% to 0.53 mnt against 0.38 mnt in the previous month (Dec’21). Demand has taken a hit for mills with finished steel prices on the upswing.
For instance, most end-users, singed by the rising prices, are moving to the sidelines.
Exports comprised 64,984 tonnes of the 0.40 mnt of total sales in February.
In billets, in which RINL is a key player, the bi-weekly SteelMint export index rose 17% to $760/t FOB ($650/t, FOB) whereas the domestic ex-Raipur index spurted 20% to INR 59,500/t (49,500/t) within two weeks of the onset of the war. A key reason for rising billet prices is the vacuum created by the Russia-Ukraine conflict whereby there are no offers from the usually prolific CIS countries. Supply disruptions in the global billets exports market is raising both export and domestic offers. BF-route benchmark rebar prices have shot up 15% of late.
Outlook
Raw material prices are not expected to cool down too soon and this will continue to worry mills, including RINL but keep finished prices on the higher side.
RINL, on its part, is not certain when it can resume its third blast furnace. “Could be in April,” a source predicted.
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