India: RINL Set to Restart Shut BF on Price Hike, Stocks Liquidation

The tide seems to turn for the better for steel public sector unit Rashtriya Ispat Nigam Limited (RINL), the holding company of the Vizag Steel Plant (VSP). The company has notched up financial year 2019-20's (FY20's) highest steel sales volume so far in the month of December, which also saw inventory levels decreasing.

Speaking exclusively to SteelMint, P.K. Rath, Chairman-cum-Managing Director, RINL, said: "Yes, steel sales volumes of 552,000 tonnes (MT) achieved in December 2019 were the highest for financial year 2019-20 (FY20)."

Rath further said that this 5.52 lakh tonnes achieved in December were 17% higher in volume and 18% higher in value over that achieved in November 2019.

Consequently, the inventory of steel in December dropped by around 200,000 MT from the level achieved in November 2019, Rath informed. Rebars inventory reduced by around 40,000 MT and wire rods inventory by around 35,000 tonnes in the same month over November 2019. As per SteelMint sources, overall inventory levels dropped to around 3.5 lakh tonnes in December 2019 against 6 lakh tonnes in the previous month while rebar inventories dropped to 60,000 -70,000 MT in December 2019 against 110,000 MT in January 2019 and wire rod inventories were at around 25,000-30,000 MT in December 2019 over January 2019.

BF shutdown

It has also been learnt from the company that out of RINL's three blast furnaces (BFs), one furnace was put in shutdown mode in September 2019, "considering the unfavourable price and inventory levels". However, Rath informed that the other two blast furnaces were operated at a higher operating regime and the volume drop was limited to about 13%. He further said that as the price and inventory levels improved, RINL is "planning to restart the third blast furnace within a month's time".

Crude steel production dropped in December last calendar to around 3.4 lakh tonnes due to the unexpected shutdown in the BF, a source informed.

However, the capacity utilisation has been lower in 2019-20 compared to the previous fiscal, due to the shutdown of the third blast furnace. RINL had achieved a capacity utilisation level of 88% in 2018-19, although Rath did not specify the exact capacity utilisation level for FY20.

Production, investments

The PSU is planning a production volume of 6.4 million tonnes (MnT) of liquid steel in 2020-21, which will be a growth of about 24% over 2019-20, Rath revealed.

RINL is planning an investment of about INR 1,400 crore in 2020-21 which will be at par with the current year's plan, Rath further informed.

Price Hike

In tandem with the uptick in demand of late, RINL increased prices of most of its products by around INR 1,000 per tonne w.e.f. from January 1, 2020.

Last prices were in the range of INR 36,000-36,500 per MT ex-southern/northern India.

When asked how does the fourth quarter (Q4) look like in terms of demand and prices, Rath said: "Generally, Q4 is the best quarter in terms of demand. We are hopeful of a further increase in prices, as the current levels are still very low. But, the timing of further price hikes depends on the market dynamics."

By Madhumita Mookerji