Posted on 29 Jun 2022
Steelmakers are expected to cut production next month by advancing annual maintenance shutdowns to regulate inventory, amid a fall in domestic demand and because of the new export duty that has made international sales unviable, said people in the know.
Finished steel inventory has piled up at steel mills, they said. A more than 22% decline in steel prices since its peak in April this year has made buyers wary of holding inventory in anticipation of further price corrections. Traders and user industries of steel had dipped into their stocks and once those depleted, they are buying only as much as they need immediately.
Consumption of steel has also come down as the seasonally slow period of monsoon arrives.
Meanwhile, steel exports have also taken a backseat since New Delhi levied a 15% export duty on the alloy from May 22 in its efforts to arrest inflation. There was no export duty on steel earlier.
All these factors have resulted in piling of unsold inventory with steel mills, forcing them to advance annual maintenance shutdowns or even pare production by taking multiple smaller production halts of 2-3 days, the people said.
Source:The Economic Times
