Steel mills revive production in May
After an unprecedented fall in domestic steel production in April due to the covid-led lockdown, large Indian steelmakers increased production in May. Preliminary numbers from two large firms, JSW Steel Ltd and Jindal Steel and Power Ltd (JSPL), and industry estimates for others, suggest that average capacity utilization improved to 75%. However, steel companies are exporting the bulk of products, while selling at a discount in India to boost sales, and profit margins are under pressure.
JSW Steel ramped up its average capacity utilization to 83% in May, up from 38% in April. Crude steel production was at 1.248 million tonnes, up 122% over April, but lower than the 1.453 million tonnes in May 2019. The bulk was flat steel products, accounting for 905,000 tonnes.
JSPL continued to outperform in May. It recorded its highest ever standalone steel sales of 640,000 tonnes, up 28% year-on-year. For JSPL, too, exports kept the mills running. Out of the 640,000 tonnes, 401,000 tonnes were exported. Consolidated steel sales stood at 797,000 tonnes, growing 26% year-on-year. Other large steel players in India have also recovered from a dismal April. Steel Authority of India operated at 55%, even as it struggled to offload nearly 2 million tonnes of an inventory backlog by boosting exports and forging new relationships with customers abroad.