Despite steel being an essential commodity and classified as continuous process industry, analysts expect that the industry will find it difficult to recover from a disastrous first quarter.
Blast furnaces are large reactors used for smelting iron ore into liquid steel at temperatures ranging from 900-1300˚ Celsius and so need to run continuously. Once a blast furnace is shut down, it is both expensive and time-consuming to restart it, taking 15-20 days to stabilise operations based on the design and size.
JSW Steel, which operates India’s largest single location steel plant with a capacity of 12 million tonnes at Toranagallu in Ballari district had shut down two out of four blast furnaces.
“We welcome the circular issued by the Ministry of Home Affairs today, to restart some select activities to mitigate the hardship being faced by the public. This will help restart some economic activity and also bring in much-needed liquidity, which will especially be helpful for the MSME sector,” said Jayant Acharya, Director (commercial, marketing & corporate strategy), JSW Steel.
NMDC Limited, India’s largest iron ore miner, is operating one and a half shifts at its mines.
“We are operating at 50% of our capacity in Karnataka Chhattisgarh by maintaining social distancing as per the norms. All our regular employees are working, while contract workers have been rested,” an NMDC spokesperson told
Kalyani Steels has shut down its blast furnace seeing steel demand disappear from the market.
“We didn’t want to place our employees at risk. Technically speaking, we were allowed to reopen plants as steel is classified as an essential commodity but in most places, the local administration isn’t allowing factories to function and no transport is available. Even if we want to run the plant, we need to move materials on a daily basis.”
The company is also evaluating restarting its facilities in a phased manner within the protocols and guidelines defined, he said and added, “We are also awaiting the guidelines from respective states.”
The Sandur Manganese & Iron Ores Limited has seen severe disruption at its ferroalloys plant in Ballari district. The company is currently producing only about 170-200 tonnes of Met Coke every day. It is currently facing Rs 66 crore worth of locked up raw material inventory. The company is also ready with about 4 lakh tonnes of iron ore for auction immediately.
“Although we are incurring about Rs 34 crore every month, we have not been able to generate sales of a single rupee since March 25 due to lockdown,” the company’s Managing Director Nazim Sheikh said in a letter to RBI.
Majority of private miners, and sponge iron plants are yet to start their operations. About 50,000 workers in the private sector are currently jobless due to lockdown, added Basant Poddar, Managing Director, Mineral Enterprises Limited.