India: Coal issues, sluggish market hold back resumption of RINL's 3rd BF

Rashtriya Ispat Nigam Limited (RINL), the holding company of Vizag Steel Plant (VSP), still has not restarted its third blast furnace (BF) which has been idled since end of January this year. As per sources, a second BF is also working on reduced capacity as had been reported last by SteelMint.

The reasons for not resuming the third BF are three-fold. One is coking coal related. SteelMint heard stocks are limited amid high prices of the fuel. Prices of the Australian low-vol HCC edged up 6% to a monthly average of $540/t in May from April, keeping most mills under pressure. RINL also buys from the spot market despite having long-term contracts.

Secondly, there are thermal coal and power issues. Where power is concerned, the PSU does not own any coal blocks or captive power plants which has been impacting its production, a company source said. It buys from the grid an assured quantum but has to pay higher for any amount drawn over and above this.

Thirdly, the overall market is sluggish and offtake for steel semi- and finished products is low. Consequently, RINL's closing stock in May went up 41% m-o-m or by over 63,000 tonnes (t) in May to 0.22 mnt compared to 0.15 mnt in April.

Production up 20% m-o-m

Saleable steel production in May 2022 went up by almost 20% to 0.24 mnt against 0.20 mnt in April. A company source said, both operating furnaces are touching around 13,000 tpd against their peak rated capacity of 14,300 tpd. The capacity utilization has been reduced because of a sluggish market, said the company source.

Sales up

However, sales went up 14% to 0.17 mnt in May against 0.15 mnt in the previous month. In this, the quantum of exports was at around 30,000 t. These export consignments were possibly previously booked orders that were shipped in May.

SteelMint learnt that no export orders have been finalised in May. This is mainly because of falling bids and sluggish global demand. Also, offers from competing Russia were lower than that of Indian mills.

The source said RINL has not been impacted by the 15% export duty slapped by the government recently on steel raw material and intermediaries since billets, products it manufactures, have been kept out of its purview.