Meltdown heat

New Delhi, Nov. 11: Steel Authority of India Ltd (SAIL), the country’s largest steel maker, may cut its output by 7-10 per cent.

The public sector steel behemoth will be temporarily shutting down some mills in its seven integrated complexes for repair, which is long overdue. Officially, however, no production cuts will be announced.

It had reported lower sales in October — both of long products, used in construction, and hot-rolled coils, used as raw material by industrial units.

SAIL had manufactured 3.5 million tonnes of crude steel in the July-September quarter. But lower sales mean the company has built up inventories that it will try to dispose of while trimming output.

In the beginning of this month, SAIL slashed prices by Rs 4,000-6,000 a tonne. This followed similar moves by rivals such as Jindal Steel and Essar. On April 3, India’s top steel makers had agreed to take price cuts of Rs 1500-2,000 a tonne on long products.

SAIL shares today fell nearly 12 per cent and traded at Rs 78.30 on the Bombay Stock Exchange.

Several major steel makers, including the Jindals, Ispat and Essar, have either announced or are contemplating production cuts of 20-25 per cent.

ArcelorMittal, the world’s largest steel maker, has announced a production cut of more than 30 per cent in Europe and the US. The company has forecast earnings will almost halve to $2.5 billion in the fourth quarter.

Corus Steel will lower production by 30 per cent in Europe, while German steel maker ThyssenKrupp AG will temporarily shut down plants next month.

On the back of weak demand from steel mills, NMDC, India’s biggest iron ore miner, is planning to cut long-term iron ore prices if spot prices come down by more than a quarter of long-term rates.