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Coronavirus impact: ArcelorMittal Nippon Steel India cuts production, Tata Steel to follow suit

JSW Steel, SAIL and RINL have also cut production. Tata Steel is expected to make an announcement soon

March 28, 2020 / 11:42 AM IST
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ArcelorMittal Nippon Steel India (AMNS) has cut its production to adjust to a demand slump from key clients in auto and construction sectors.

The company is the fourth steelmaker in India after JSW SteelSAIL and RINL, that has adjusted its production, as economic activity has come to a near standstill amidst a lockdown to limit spread of the coronavirus (COVID-19).

While a AMNS spokesperson confirmed the step, he declined to share further details. But executives from the industry said that as with all steel companies, the cut will be 'substantial' in AMNS too.

"Construction has come to a standstill amidst the lockdown and almost every auto company has shut factories. There is no point in steelmakers continuing to make steel and piling up inventories," said a senior executive from the sector.

Construction, real estate and auto are the biggest consumers of steel.


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AMNS, which was earlier known as Essar Steel, had a 'run rate' of 7.4 million tons for the financial year, said an executive, pointing out what the steelmaker's annual production would have been. "But in the second half of March, there has been a production cut," the person told Moneycontrol.

While Tata Steel, India's largest steelmaker, is yet to announce any adjustment at its production facilities, it is said to be considering a similar move.

JSW Steel had announced the cut in a notice to the exchanges on March 26. "With exception to certain specified essential activities, the manufacturing operations in all of our locations have since been either scaled down or suspended (in certain locations)," the company said.

SAIL, said a report by PTI, has cut production by 10 percent.

Apart from a demand slump, steelmakers in the country are also facing a shortage of labour. Most of the steel plants employ a substantial number of contractual staff, who have said to have moved back to their home towns and villages because of the virus spread.
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Mar 28, 2020 11:42 am
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