The Indian government has restricted the use of liquid oxygen to medical purposes as the country struggles to manage a surge in Covid-19 cases.
The home affairs ministry (MHA) announced yesterday that liquid oxygen will only be allowed for medical purposes, with manufacturing units allowed to increase production only to meet demand. The restrictions also apply to existing stocks and "no exception is allowed to any industry with regard to the use of liquid oxygen", the order added.
The MHA statement follows a previous order that exempted steel plants from oxygen supply curbs as the country grapples with rising Covid-19 cases.
The surge in Covid-19 cases and the government's efforts to control the spread have so far had limited ramifications for the country's steel sector, although participants remain watchful of implications caused by constrained logistics and rising oxygen demand for medical use.
And the crisis also prompted the chief minister of the north Indian state of Punjab, Amarinder Singh, to yesterday order the closure of the state's iron and steel sector to divert oxygen for medical use.
Ludhiana, located in Punjab, is one of India's key pig iron buyers. India is also an exporter of pig iron. Basic pig iron offers from India to the US hit a maximum level of $600-620/t cfr recently. Offers from the country have risen as Covid-19 conditions have worsened production and logistical difficulties.
The rise in domestic steel prices was halted last week, after more curbs were imposed by state and federal governments to control the virus spread. But market participants said that steel demand in India is unlikely to suffer significantly, given the sector falls under essential commodities and as government-funded projects support demand.
Oxygen is used in all parts of the steelmaking process, with steel mills typically requiring 500 t/d of oxygen for their blast furnaces or basic oxygen furnaces to produce about 1mn t/yr of steel
"Oxygen is needed for some downstream processes, like in coating or for testing products, but due to the high oxygen demand, we have lowered our inventories," a pipe maker told Argus.
"We have not seen any adverse impact on downstream demand due to the rise in Covid-19 cases and resulting curbs as many construction and infrastructure projects were announced after the lockdown last year and we are booked out for this year," he added. But labor availability may tighten as Covid-19 spreads through the country and that may impede day-to-day operations, he said.
Another steelmaker official said that tight supply of oxygen has led some steel fabricators to try out alternatives to the gas in plasma cutting works. "Some fabricators are trialing using other gases but those that cannot use alternatives have to close operations," he added.
