Steel cos seek relief from govt over propane supply: sources

ISA has written to the steel and petroleum ministries after fuel diversion to domestic LPG tightened propane and butane availability for coated steel production.

• Steel companies request propane and butane amid supply shortages
• Government prioritizes LPG, impacting coated steel production
• JSW Steel unit faces potential shutdown due to propane shortage

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Indian steel majors have reached out to the central government, requesting allocation of propane and butane, crucial for carbon steel and coated steel production amid the ongoing supply snarls triggered by the war in the Middle East, two sources familiar with the matter told Moneycontrol.

The Indian Steel Association (ISA), which represents major steel players like Tata Steel and JSW Steel, has sent a letter to the Ministry of Steel (MoS) and the Ministry of Petroleum and Natural Gas (MoPNG), seeking relief after the centre enacted the Essential Commodities Act, 1955, to prioritise natural gas and LPG supply. The letter was sent on March 7, sources said.

On March 10, the government invoked the Essential Commodities Act, 1955 empowers the Union government to regulate the production, supply, and distribution of essential goods such as foodstuffs, edible oils, fertilisers, drugs, fuels, and seeds.

Separately in a March 4 order, the government directed refineries to divert all propane and butane streams exclusively toward the production of domestic LPG (cooking gas) to address shortages. This prioritisation of household LPG has directly impacted industrial sectors, such as coated steel production, which rely on pure propane for high-heat processes

The association did not immediately respond when reached out for a comment.

"With 80% of the supply diverted to priority sectors, steel manufacturers are seeking relief to maintain coated steel production, which relies heavily on propane," said the first source.

Propane is a critical industrial fuel used in the production of coated steel (specifically color-coated and galvanized steel) because it provides the precise, high-intensity heat required for several stages of the coating process.

The coated steel business in India is dominated by a few large integrated steel producers, including JSW Steel, AM/NS India Ltd, Jindal Steel and Tata Steel.

"It's a key production source for carbon steel processes and coated steel, so we have requested both the steel and petroleum ministries to allow the supply of propane. The production units are still functioning because usually plants have up to 20 days of stock; the impact will be felt later if the supply continues to be restricted," said the second source.

According to a Reuters report, one of the JSW units is staring at a potential shutdown.

Coated steel products, including colour-coated and galvanised sheets, are among the highest-margin offerings for Indian steelmakers, driven by strong demand from sectors such as construction, infrastructure and appliances.

Major producers like JSW Steel and Tata Steel are increasingly investing in downstream capacity to capture greater value, with coated products forming a key part of their high-margin, value-added portfolios.