India’s steelmakers are having a lot of trouble because of a lack of LNG supplies caused by the growing war in the Middle East. This is especially hard on tiny companies in Gujarat. This problem might stop manufacturing and have effects on the whole economy.
Crisis Trigger
The U.S.-Israeli-Iran war has also hurt fuel shipments from Qatar, a major supplier which is responsible for about half of India’s LNG imports. Last week Gujarat Gas and others announced force majeure, limiting industrial supplies because of suspended LNG production, and tensions in the Strait of Hormuz. India, the fourth-largest buyer of LNG in the world, is now rationing gas, which is affecting energy-hungry industries.
Steel Industry Impact
Steelmakers functioning as DRI using imported LNG — constituting 6% of India’s steel production are cutting operations in the country. Triveni Iron and Steel Industries has reduced output by 50% at this time, with complete shutdown in a week if supplies do not improve. Friends Steel Group, which is also part of both groups, has shrinking margins, making pricing decisions on slim profits more complex.
Broader Effects
The Sponge Iron Manufacturers Association says that geopolitical tensions are making coal prices go up by 10–12%. Companies that make fertiliser, such IFFCO and Kribhco, are only slightly affected, but big companies like ArcelorMittal have a month’s worth of inventories to fall back on. The cost of LNG tankers has risen, making supplies even tighter around the world.
Industry Voices
Anshum Goyal of Friends Steel Group remarked, “We work on wafer-thin margins, and our margins have gotten smaller.” Yogesh Kanakiya from Triveni said that without rapid help, businesses would have to shut down completely. Rahul Mittal talked on the rising costs of coal and shipping.
Government Outlook
India keeps a supply of crude oil and petroleum on hand in case of short-term problems. Officials keep an eye on Petronet LNG and GAIL’s usage of force majeure and give households priority if necessary. There haven’t been any big changes to policy yet, although spot market tenders are in the works.