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【Ferro-alloys.com】：Disruptions in fuel supplies and maritime operations, amid the escalation in the Middle East, have begun to affect companies

Indian steelmakers are beginning to feel the effects of gas supply shortages amid the escalating conflict in the Middle East.

According to Reuters, citing an internal memo, this situation has disrupted operations at some plants belonging to JSW Group, a leading Indian steel conglomerate. One of the plants may be shut down in the coming days.

The JSW memo notes that disruptions in fuel supplies and maritime operations are beginning to affect its operational stability and supply chain. As a result, JSW Steel Coated Products risks failing to meet its obligations to sell and supply tinplate under a government production-linked incentive scheme and is requesting a six-month extension.

JSW has also received a force majeure notice from one of its key suppliers—Petronet LNG Ltd—which has affected LNG supplies.

Previously, in a separate letter dated March 7 to the federal minister of steel, which the agency also reviewed, the Indian Steel Association (ISA) noted that the shortage of propane and liquefied petroleum gas has affected the entire value chain and will have a significant negative impact on SMEs operating in the steel sector and their ancillary units.

India has implemented emergency measures, restricting natural gas usage to priority sectors, after LNG supplies through the Strait of Hormuz were disrupted. The ISA has appealed to the government to expedite subsidized spot imports from sources outside the Middle East and ensure priority allocation of funds to steel and related industrial clusters.

India’s Jindal Stainless announced late last week that its plants are operating at reduced capacity due to fuel shortages. Because stainless steel production relies heavily on industrial gases such as propane/LPG and natural gas, this has negatively impacted several processes at the company’s facilities. Earlier, on March 6, Jindal Stainless announced possible delays in steel product shipments to the Middle East. The region accounts for a small share of its export market, but the company was committed to serving it.

Argus Media, citing market participants, reports that some of the country’s steelmakers — particularly smaller ones operating induction furnaces — are cutting back on production and rationing their available gas supplies. Some secondary steel producers that use scrap and direct reduced iron (DRI) as raw materials have also encountered difficulties.

Among large integrated producers, market sources note that ArcelorMittal Nippon Steel (AMNS) India faces the greatest risks, as it makes extensive use of direct reduced iron (DRI). Approximately 65% of the company’s steel production capacity (9 million tons per year) operates using gas-based DRI technology and electric arc furnaces. A source at the company reported that they have hedged their gas supplies, but there is a risk of potentially longer disruptions if the conflict persists.

The gas supply shortage has also heightened concerns in the galvanized steel sector, which is a major consumer of propane. According to market sources, small processors have been particularly hard hit.

• [Editor:Alakay]