SAIL has posted 5% y-o-y growth in crude steel production at 19.24 mnt in FY'24 versus 18.29 mnt in FY'23. Production rose 6% q-o-q to 5.02 mnt in Q4FY'24 against 4.75 mnt in the last quarter. Sales volumes edged up by 5% y-o-y to 17.02 mnt in FY'24 compared with 16.20 mnt in FY'23. Q-o-q, sales increased by 20% to 4.56 mnt in Q4 as against 3.81 mnt in the preceding quarter.

Ship-breaking melting scrap prices in Alang, Gujarat, remained stable for the third consecutive day on 21 May'24. According to BigMint's assessment, HMS (80:20) prices were at INR 38,800/t ($466/t) ex-yard. Though semi-finished steel prices decreased in yesterday's trading session in the region, moderate buying inquiries for scrap by the Bhavnagar-based IF steel mills prompted suppliers to keep offers stable today.

*Halt in coal transportation disrupts RINL's operations*PSU steel producer reports sharp drop in April'24 production*Supply concerns fuel hike in BF-origin rebar prices, gap with IF widensMorning Brief: The workers' strike at Adani Gangavaram Port Limited (AGPL), which continued for well over a month, seems to have ended with stranded coal cargoes at the port being finally released and transported to industrial end-users. Visakhapatnam-the throbbing industrial hub of Andhra Pradesh-is the operational base of one of India's key steel CPSEs-the Vizag Steel Plant (VSP).Port operations had come to a grinding halt on 10 April 2024, with the port authorities declaring force majeure and coal transportation getting disrupted over an agitation by the employees demanding equitable wages compared to their counterparts at the Visakhapatnam Port Authority (VPA). In addition to wage parity, workers agitated over a comprehensive compensation package of INR 40 lakh for fatalities that occur on duty, as well as allowances for dust, dirt, and night duty.Port capacityLocated in the northern part of Andhra Pradesh, Gangavaram has total cargo handling capacity of 64 million tonnes per year established under concession from the state government that extends till 2059. It is an all-weather, deep water, multipurpose port, with the capability to handle fully-laden Capesize vessels of up to 200,000 deadweight tonnes (DWT).The port handles a diverse mix of dry and bulk commodities including coal, iron ore, fertilizers, alumina, bauxite and steel. It has nine berths of up to 19.5 m water depth and a fully mechanised coal terminal with two berths which can handle two Capesize coal vessels simultaneously. APGL is the gateway port for a hinterland spread across eight states in southern, eastern and central India.Gangavaram became a 100% subsidiary of Adani Ports and Special Economic Zones Ltd. (APSEZ) in January this year after clearance was received from NCLT Hyderabad and NCLT Ahmedabad. India's leading industrial houses such as Adani Enterprises, RINL, SAIL, JSPL, Ultratech Cement, JSW's Bhushan Steel and Power, etc. depend on the port for critical raw material supplies.Gangavaram handled around 18.75 mnt of coal (both coking and non-coking) imports in 2023, as per BigMint data. India imported 264 mnt of coal in CY'23, and Gangavaram's share was 7%.Impact of strike*RINL worst sufferer:State-run Rashtriya Ispat Nigam Ltd. (the corporate entity of VSP) was hit the hardest due to disruption at Gangavaram port which halted coal transport to its steel plant. RINL imports both hard and soft coking coals as well as PCI through Gangavaram which are critical to sustaining its BF operations. The steelmaker, with total capacity of 7.3 mnt, has three BFs and five coke ovens and total crude steel output in FY'24 stood at 4.41 mnt. Out of 7 mnt of coking coal imports via Gangavaram in FY'24, BigMint data show RINL imported over 3.8 mnt.Therefore, critical supplies to the steel plant stopped as the agitation continued, thereby impacting RINL's production: crude steel output dropped sharply in April by 32% m-o-m to 271,000 t from 401,000 t in March. Production dropped over 30% y-o-y in April compared with 398,000 t in April'23.To combat staggering revenue loss and in view of the health of idle equipment, RINL's management initiated a strategy to ensure uninterrupted coal supply. With the urgent need to handle approximately 150,000 t of coal stranded at the port, RINL collaborated closely with the district administration to expedite the restoration of operations.Two vessels were rerouted to Vizag Port, facilitated by the VPA, to guarantee raw material security. The steelmaker obtained a commodity loan of 50,000 t of coal from alternate ports to mitigate immediate shortage and a global tender was initiated for emergency procurement of 150,000 t of coal, ensuring a diversified supply chain.*Price gap between BF-IF rebar widens: RINL is a major producer of finished long steel products such as wire rods, plain and forged rounds, structurals and, most importantly, reinforcement steel or rebar. The sharp drop in RINL's steel production in April amid disruptions impacted supplies of BF-origin rebar in the market and participants in the distribution channel, especially in the key south Indian markets of Hyderabad, Bangalore and Chennai (markets in geographical proximity to Visakhapatnam and served by RINL) started to raise quotes.As a result, the spread between BF- and IF-origin rebar in these markets widened significantly in the range of INR 6,000/t to over INR 8,000/t-an increase of 60-65% compared with March spreads, BigMint data reveal. However, the gap is expected to shrink as supplies normalise.OutlookWith disruptions coming to an end and restoration of normal coal transport from Gangavaram to RINL, it is expected that the steelmaker will resume full-scale operations from the end of this month and temporary supply issues in the adjoining markets will slowly disappear. However, the Gangavaram stand-off once again highlighted the fragility of the domestic steel industry, over-dependent as it is on coking coal imports.