Steel production takes a hit amid second wave of COVID-19 due to oxygen diversion
Steel production takes a hit amid second wave of COVID-19 due to oxygen diversion

Many large steel companies like Tata Steel, JSW Steel, SAIL and others started supplying oxygen to meet the growing demand of the gas among the COVID-19 patients over the last few weeks. This was after the centre prohibited the supply of oxygen for industrial purposes by manufacturers and suppliers from April 22 due to surge in demand for oxygen.

The minimal production activity in various plants is going to impact the steel production in the country.

A person familiar with the matter said, “Over the last few weeks, all large steel plants in India are having minimal or no production as the government barred the industrial use of oxygen.”

This is expected to impact the production and at some level lead to short-term shortage of steel, stated a person.

As per government data, the steel industry supplied a total of 4,686 MT of Liquid Medical Oxygen (LMO) on May 12. “It included 1,193 MT by SAIL, 180 MT by RINL, 1,425 MT by TATA group, 1,300 by JSW, and the rest by other steel companies in the public and private sector.”

With this, the total production of Liquid Medical Oxygen in the country has risen to almost 9,500 MT per day, showing the capacity utilisation of about 130 per cent of the installed capacity. At that point, steel plants contributed nearly half of the national production of LMO, stated ministry data.

Basic oxygen steelmaking is a primary steelmaking process for converting molten pig iron into steel by blowing oxygen through a lance over the molten pig iron inside the converter.

It needs to be noted that the oxygen requirement in the country still continues to be high due to COVID. So, it will take some time before diverted oxygen reaches the plants in the country.

Before all this, Indian steel companies have been in a sweet spot as the international steel prices have been rising and domestic consumption of steel marginally dropped. Now, with the drop in steel production, it is more likely to impact exports as well. The export will hurt further with rise in domestic demand.

In addition, since January the production of crude steel has dropped in the country. India's crude steel output fell by 1 per cent to 19.1 million tonnes (MT) during the first two months of 2021, according to worldsteel. The country had produced 18.9 MT crude steel during the same period last year. “This will drop further in the first quarter of FY 2021.”

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