India: RINL sees high inventory pile-up in Jun’21, mills navigate dull market

The closing stocks of Rashtriya Ispat Nigam Limited (RINL), the holding company of Vizag Steel, are at an almost one-year high in Jun’21 at over 4 lakh tonnes, as per information available with SteelMint.

The closing stocks at the end of May’21 were at around 2.98 lakh tonnes. Thus, Jun stocks are up by around 34% m-o-m.

But, RINL is not alone in battling high inventory at present. Most mills are facing stockpile issues which are stretching into almost 25-30 days against the previous holding period of around a fortnight. Another mill, it was heard, was able to sell barely half of its production in June in an indication that mills are facing hurdles in selling in a dull domestic market. Mills have even resorted to offering trade-level discounts to their dealers, it is heard.

Because of inventory pile-up, steel prices have come under pressure over the last few weeks. Sales of long products, in which RINL is a key player, in any case, turn weak in monsoon. Added to that are the Covid-induced lockdowns, which have further dried up demand.

Sales

RINL’s Jun’21 sales were at around 3.06 lakh tonnes, down almost 9% compared to 3.37 lakh tonnes seen in May’21. Again this is a pointer to the dull domestic demand scenario that all mills are facing.

Export prospects have turned bleak too because of lack of vessels, high freights, quarantine issues at ports etc. China has not been seen lifting Indian billets cargoes of late either.

Production

Meanwhile, RINL’s crude steel production in Jun’21 was at about 4.3 lakh tonnes, as per sources, against 4.48 lakh tonnes seen in May’21. Apr’s crude steel figure was at 4.7 lakh tonnes.

With sales drying up, mills are having no option but to lower production m-o-m.