Coronavirus: SAIL Cuts  Production Amid India Lockdown
An employee sprays water to cool the mud gun of blast furnace inside the metal blast furnace unit at the Steel Authority of India Ltd. (SAIL) Rourkela Steel Plant (RSP) in Rourkela district, Odisha, India. (Photographer: Dhiraj Singh/Bloomberg)

Coronavirus: SAIL Cuts Production Amid India Lockdown

Bookmark

State-owned Steel Authority of India Ltd. has reduced its production by up to 10 percent amid supplies being hit due to the ongoing lockdown to combat the coronavirus crisis, according to a source.

The development comes days after the steel ministry directed its public sector undertakings, including SAIL, to not reduce production. SAIL, which has an installed capacity of over 21 million tonnes per annum, produces about 50,000 tonnes of hot metal and 48,000-tonne crude steel on a daily basis.

"The company has reduced its production by 7-10 percent," the source said adding that the decision has been taken in view of the supplies being affected due to the lockdown. The source said the company is facing difficulties in getting the raw materials as well as in dispatching the products through rail and road.

"Transportation of raw materials is affected. Even if we continue production, then where to sell the output? Everything is closed. Under the current scenario we can't just pile up inventories, " the source said requesting anonymity.

On Monday, Steel Secretary Binoy Kumar chaired a meeting via video-conferencing, in which senior officials of state-run steelmakers like SAIL, Rashtriya Ispat Nigam Ltd., NMDC Ltd., MOIL, KIOCL Ltd., among others, participated. In the meeting, the official while enquiring about the preparedness at their plants and units in the wake of coronavirus outbreak had asked the PSUs to continue to produce as usual and not reduce the production levels.

SAIL and other PSUs also apprised the ministry about the issues faced by their officials during the current lockdown. The source said keeping the vital equipment like coke oven batteries, blast furnaces, etc in running condition is very essential for steel plants.

A blast furnace is a large structure of about 30 metre high at steel plants. It is lined with refractory firebricks that can withstand temperatures as high as 2,000 celsius. Once stopped, it takes several months for a steel company to re-start the critical steel making process.

Also read: India’s Three-Week Lockdown Ripples Through Metal Sector

The source further said "SAIL is facing challenges in movement of essential items required for production, clearances, and handling at ports, movement of employees and labours. It is also facing difficulty in the unloading of materials from rakes at sidings. Due to this, production is also getting marginally affected." However, many of the above issues are getting resolved over time and the company is monitoring the emerging situations on a continuous basis with respect to the availability and supply of raw materials, production and dispatch.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.