Tata Steel Production back at 100% Capacity.

Due to the market conditions, steel makers like Tata Steel were forced to cut down their operations by up to 50 per cent in April. The players also had to turn to exports to find markets for their produce. However, with the relaxation of lockdown norms, the company ramped up its production in a phased manner.

Its overall India operational capacity (including Tata Steel BSL and Tata Steel Long Products) is 20.6 million tonnes per annum (MTPA). In the first quarter of 2020-21, Tata Steel India produced 2.99 million tonnes of crude steel while sales stood at 2.92 million tonnes.

Tata Steel’s production level has now recovered to 100 per cent as the company sees a revival in domestic demand in the current quarter led by a good monsoon and rural economy. The company is now less dependent on exports compared to the first quarter. The COVID-19 outbreak in India, followed by the national lockdown, impacted the steel industry severely. It disrupted the supply chain and impacted the demand as well as production.

The other area where Tata Steel is seeing demand is where the government is spending including the oil and gas sector, water conveyance systems and railways. Construction is still a bit slow but the monsoon quarter has traditionally been the weakest quarter for construction. To counter the closure of the Indian markets in April and May, Tata Steel had ramped up exports significantly by tapping new markets and improving the supply chain capability and export constituted around 50 per cent of total sales volume in April-June 2020-21

Indian steel mills reduce exports to China

Steel manufacturers are reducing dependence on China for exports, with the gradual opening up of business across the world.

Even though the country still accounts for the lion’s share of semi-finished steel exports from India, China has come off from the highs during the lockdown. According to data from the Joint Plant Committee (JPC), India exported 1 million tonnes of semi-finished steel to China during April and May, while total semi-finished steel exports stood at 1.3 million tonnes.

Steelmakers expect exports to reduce, with an improvement in domestic demand. The lockdown had pushed steel exports to record levels, with semi-finished steel in the first four months of FY21 crossing the overall volumes of semi-finished steel exports in FY20.

Finished steel exports during April-July were more than 50 per cent of total volumes of finished steel exports last year.

Most firms resorted to exports during April and May, to tide over the lockdown that hit end-users of steel. However, there was a decline in exports month-on-month. In June, finished steel exports stood at 1.5 million tonnes while semi-finished steel was at 991,000 tonnes. But in July, the corresponding figures were 1.38 million tonnes and 941,000 tonnes.

Even After Trade Tensions, China Is Importing Large Quantities of Steel From India

While many businesses have been hit during the pandemic, India’s steel exports have reportedly more than doubled between April and July and hit their highest level in at least six years. This is because of a surge of Chinese buying. 

Trade tensions between the two countries have been high since the Galwan valley face-off between the army of the two nations. While India is running a ‘self reliance’ or atma nirbhar Bharat campaign, it looks like Chinese buyers are importing steel from India in defiance of the tensions Beijing and New Delhi. Traders said reduced prices had led them to the purchase as Indian sellers sought to get rid of a surplus generated by the impact of COVID-19 on domestic demand and generate much-needed income.

Its not clear whether the sales broke any rules but the China Iron and Steel Association is reportedly monitoring them. Steel companies Tata Steel Ltd and JSW Steel Ltd were among Indian companies that sold a total of 4.64 million tonnes of finished and semi-finished steel products on the world market between April and July. In comparison, 1.93 million tonnes was shipped in the same period a year earlier.  Vietnam and China bought 1.37 and 1.3 million tonnes of steel of the 4.64 million tonnes. These  Chinese purchases are the largest since data was first collated in the current form beginning with the fiscal year April 2015-March 2016, the report states. Even though China, the world’s leading steelmaker produces vast quantities, its still importing as it has ramped up infrastructure spending.

During the first four months of the 2020-21 fiscal year, China and Vietnam together bought close to 80% of India’s total hot-rolled coils exports, the data showed, while the product constituted more than 70% of India’s steel exports.