- 29 Jun 2022
- ICICIdirect Research
STEEL COMPANIES LIKELY TO TAKE EARLY ANNUAL MAINTENANCE SHUTDOWNS AMID UNVIABLE EXPORTS, STOCK PILE UP
News: As per media sources, steelmakers are expected to cut production next month by advancing annual maintenance shutdowns to regulate inventory, amid a fall in domestic demand and due to the new export duty that has made international sales unviable.
Views: Around 22% decline in steel prices since its peak in April 2022 has made buyers wary of holding inventory in anticipation of further price corrections. Traders and user industries of steel had dipped into their stocks. Once those got 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. As per media sources, all these factors have resulted in piling up of unsold inventory with steel mills, forcing them to advance annual maintenance shutdowns or even pare production by taking multiple smaller production halts of two to three days. Usually steel companies take 15-25 days shutdown in September or October, when domestic demand is low. However on the back of the current challenging situation many steel companies are likely to take annual maintenance shutdown in the coming month itself.
Impact: Negative