Will Primary Mills’ Maintenance Shutdown Impact Steel Prices? 

Rashtriya Ispat Nigam Ltd (RINL), a significant player in India’s steel industry, is on the verge of shutting its Visakhapatnam steel plant due to a severe coal supply crisis. The plant has encountered a critical shortage of coking coal which is essential for its operations. Supply disruptions caused by worker protests at Adani Gangavaram Port still continue.

The Crisis Unfolds

The coking coal supply to RINL has been halted since last month, as workers’ protests have stopped the transportation of raw materials. Approximately 700 crore worth of coking coal and limestone, are stranded at the port due to ongoing labor agitation for improved wages.

Appeals for Intervention

RINL has sought the state government’s intervention to ensure an immediate supply of raw materials. The steel maker along with state government authorities and trade union leaders, has appealed to the angry workers at Gangavaram Port to supply of essential raw materials to avoid ongoing operational crisis at the Visakhapatnam steel plant.

Mills’ Maintenance Plans

RINL is India’s major producer of steel longs including rebar (TMT), wire rod and structural steel. The plant produces around 0.15 million tons of rebar monthly. The company recently achieved a 20% increase in crude steel output in April 2024. Market participants are cautiously looking for the repercussion of RINL’s post-sutdown as the mill has a very low to nill inventory level of its finished goods. 

SAIL along with its Durgapur Steel Plant and IISCO Steel Plant based in West Bengal, is also planning to go for maintenance shutdown, probably from next week. This will further strain the market.

Market Outlook for Primary TMT Segment

Market analysts anticipate a firming up of primary TMT prices amidst the ongoing supply constraints and heightened demand. Despite mills having spiked TMT rates by up to Rs. 5,000 per ton month-on-month basis, the scarcity of finished materials may exert upward pressure on steel manufacturers to maintain elevated pricing.

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