Jindal Stainless MD says processes ‘adversely impacted’ due to heavy dependence on industrial gases, West Asia conflict

Abhyuday Jindal, MD of Jindal Stainless today said that operations at the company's plants have been “adversely impacted” by the low supply of industrial gases needed to manufacture stainless steel.

In a statement on 13 March, the executive said that fuel constraints due to disruption in the global shipping routes has also added pressure to supply chain and margins.

Jindal Stainless' Hisar (Haryana) facility manufactures around 0.8 million tonnes of stainless steel per annum (MTPA), while its Jajpur (Odisha) facility manufactures about 2.2-MTPA.

‘Plants are operating at a rationalised capacity’

“Due to the heavy dependence of stainless steel manufacturing on industrial gases such as propane / LPG and natural gas, several processes across our plants have been adversely impacted," Jindal said.

He explained that unlike the conventional steel industry, which largely utilises blast furnace and coke oven gases as energy sources, the stainless-steel industry follows the scrap-based production route where such gases are not generated internally. “Given the constraints in fuel availability, our plants are operating at a rationalised capacity,” he added.

Further, he noted that the company's supply chains and margins are also under pressure. “Disruptions in global shipping routes are resulting in vessel diversions, longer transit times, and cargo delays, which are also placing additional pressure on supply chains and margins,” he stated.

‘Clarity on the allocation percentage, assurance of supplies important’

On expectations from the government, Jindal appreciated that the Centre is “fully seized of the matter and is actively prioritising fuel allocation for critical sectors”.

He did add that clarity on the allocation percentage for industrial propane / LPG and natural gas, along with assurance of regular supplies will be important; so that the stainless steel industry can “plan and optimise operations”.

“In the absence of such clarity, we foresee a cascading effect across the industry, the severity of which will depend on how quickly these issues are resolved,” Jindal added.

Why is India facing LPG, LNG and oil shortage?

The United States and Israel's attacks on Iran, followed by the Islamic Republic's retaliation, have led to the closure of the Strait of Hormuz, a critical waterway which transports around 85-90% of India's LPG imports from West Asia, including Saudi Arabia and Qatar.

According to the Oil Ministry, to create a buffer against regional disruptions, India has been steadily reducing its dependence on the Strait of Hormuz, and nearly 70% of crude oil imports now arrive via alternative routes.

At a media briefing on Friday, Sujata Sharma, Joint Secretary (Marketing & Oil Refinery), Ministry of Petroleum & Natural Gas, said that LPG remains a concern, but “no dry-out has been reported at any of our 25,000 distributors”.

“Domestic production of LPG has increased by 30% as of today; compared to 5 March, our refineries are currently producing 30% more LPG,” she stated.

Notably, United States Trade representative Jamieson Greer said they do not expect the Iran war to have long term impact. “Our expectation is that any effects of the Iran war we see will be short-lived.”