Indian mills cut steel inventory amid declining production of finished product

India’s mills are working to reduce their steel inventories as domestic production of finished steel fell for a third-straight month in August amid poor demand.

Production in August amounted to 8.39 million tonnes, while consumption fell to 8.23 million tonnes from 8.85 million tonnes in July, data released by the Joint Plant Committee showed.

“Every mill has decided to cut back production instead of going the whole hog,” a New Delhi-based mill source said, adding his company is producing at 85 per cent capacity utilization, down from 90-92 per cent earlier.

The steel sector has witnessed a continuous declining trend in production since June, the ministry of steel said, citing low demand from sectors such as “the auto sector, capital goods, real estate and infrastructure. Global factors have also added to the present situation.”

In August, India produced 2.30 million vehicles, an 18.4 per cent fall on the year, data from the Society of Indian Automobile Manufacturers showed.

Meanwhile, Indian steel exports posted increases in both July and August.

“Higher inventory levels and subdued domestic demand resulted in an increase in the export volumes,” the steel ministry said, adding that August was the second time in 2019 that India was a net exporter of finished steel. The first such occurrence was in February this year.

“India’s exports to Vietnam, Italy, Nepal, Hong Kong, and UAE have increased. Exports of HRC and Semis have witnessed a significant increase to these countries,” the ministry said. “July and August 2019 exports registered a significant growth of 53.8 per cent and 113.7 per cent, respectively, surpassing imports in volume terms during the month of August 2019.”

Although still an overall net importer of finished steel, India plans to boost its exports. “Our overall capacity is around 140 million tonnes/year and our production is around 100 million tonnes/year. We want to be a net exporter of steel for a long period of time in the next three years,” Dharmendra Pradhan, India’s minister of steel, said early this week.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

Leave a Reply

Your email address will not be published. Required fields are marked *