Indian steel output slows as automakers halt operations
Indian steel mills are reducing output in response to a halt in operations at automakers and a shortage of staff as workers rush back to their hometowns in fear of the coronavirus outbreak in major cities.
A nationwide curfew yesterday led to panic among workers at construction sites, factories and even restaurants and grocery stores, resulting in a mass exodus of daily wage labourers from major cities.
Coronavirus cases in India rose to 415, prompting the government to suspend most train and metro services and order shops to close until 31 March. Workers rushed back to their hometowns before transportation services were halted.
"Labour is not available and plants are running at low capacity," said a product manager at a Kolkata-based re-rolling mill. A Delhi-based steel wheels plant was also forced to shut down because of a lack of staff, a company director told Argus.
Most consumer sectors have halted operations so "steel demand has been hit and sales will decline this week," said a sales manager at state-owned Steel Authority of India. Steel mill officials were unwilling to comment on current capacity utilisation rates.
Major automakers such as Maruti Suzuki, Mahindra & Mahindra, Fiat and Hyundai have announced a halt to operations to contain the spread of the coronavirus. "The duration of this shutdown will depend on government policy," Maruti Suzuki, the largest carmaker in India, said yesterday.
Mahindra has stopped manufacturing at one of its plants in Maharashtra and will suspend work at two other facilities from today. The company aims to start making ventilators for coronavirus patients at its manufacturing plant.
India's auto sector, which accounts for about 12pc of India's 100mn t/yr steel demand, was already accelerating output cuts. Automobile production in February fell by 18pc to 1.64mn t vehicles, faster than the April-February decline of 13.3pc to 20.49mn vehicles.
Indian mills cut export offer levels today, possibly signalling a shift in sales to export. A large major mill today was seeking to sell SAE-grade hot-rolled coil (HRC) to China at $435-440/t cfr basis.
Domestic prices were unchanged last week at 37,000 rupees/t ($494/t) ex-Mumbai for HRC with 3mm thickness as liquidity dried up ahead of expected impacts from the coronavirus outbreak.
By Charlotte Rao
source: Argus Media
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