JSW Steel – India’s largest steel producing company today announced its results for quarter ended Mar’18 and for financial year 2017-2018. The company reported highest ever annual performance in FY18. Company’s standalone crude steel output was recorded at 16.27 MnT, up 3% Y-o-Y and saleable steel sales climbed by 6% Y-o-Y to 15.62 MnT. Also in Q4 FY18, the steel making company recorded highest quarterly performance with crude steel production of 4.31 MnT.
Robust domestic demand, primarily for long products boosted quarterly sales volumes of JSW Steel. Vehicle sales remain robust while industrial production growth has been positive in FY18.
Company’s standalone operating EBIDTA was at INR 13,741 crores, up 19% Y-o-Y.
1. FY19 crude steel production guidance at 16.75 MnT – The company has set production guidance of 16.75 MnT for FY19, up 3% Y-o-Y and saleable steel sales guidance at 16 MnT, up 2.5% Y-o-Y. The company plans to increase market share specially in south & west India.
2. JSW to start operations at 2nd captive iron ore mine- Out of five iron ore blocks, JSW Steel won in auctions, it has already started operation at one of its mine two months back. Another one is likely to be started in a months time and rest three have obtained 1st stage clearances from MoEF and likely to start by H2 FY19. Collectively they will supply 4.3 MnT pa. The company is also likely to start operations at its conveyor belt (capacity of 22 MnT) for movement from proposed iron ore mine in Oct’18.
3. Coking coal consumption cost moved up in Q4 FY18 – Blended Coking coal consumption cost moved up from USD 187/MT, CFR in Q3 FY18 to USD 205/MT in Q4 FY18.
4. JSW Steel inventories down in Q4 FY18 – Company recorded increase in sales in both exports and domestic market in Q4 FY18. Also its steel inventories moved down in Q4.
5. CCI approval for Monnet Ispat Acquisition – JSW Steel said Competition Comission of India (CCI) has approved bid by consortium led by it to acquire Monnet Ispat & Energy. JSW Steel Limited and AION Investments Private II Limited (AION) had submitted a bid for MIEL
6. Plan to expand JSW overall steelmaking capacity to 24.7 MnT pa by 2020- The company plans to increase crude steelmaking capacity to 24.7 MnT by 2020 and enrich product mix with 3.2 MnT pa additional downstream capacity. Capacity enhancement of Pre-Painted Galvalume Line (PPGL) at Kalmeshwar by 0.22 MnT pa. Setting up 0.3 MnTpa colour coated line at CRM complex at Vijayanagar
JSW Vijaynagar crude steel capacity would increase to 13 MnT pa (enhancement by 1 MnT of wire rod capacity) by March 2020. Expansion plans at JSW Dolvi to 10 MnT pa under implementation.
7. JSW Backward integration plans – The Company has decided to set up a 8 MnTpa pellet plant at Vijayanagar to strategically reduce the dependency on more expensive lump iron ore. The Company has also decided to set up a 1.5 MnT pa coke oven plant at Vijayanagar to bridge the current and expected gaps in coke availability. Both these projects are expected to provide significant cost savings and are likely to be commissioned by Aug’19 and Mar’20 respectively.
8. Indian steel consumption expected to grow by 7-7.5%- Steel consumption in India is expected to grow by 7% – 7.5% in FY19 on the back of government push for infrastructure projects and strengthening consumer demand. Development projects in bridges, highway,metros and commercial will boost rebar demand. Also increasing demand for pipes in oil & gas sector, automobile, roofing and solar panels will boost demand for flat steel and coated steel.
9. Steel imports to India remained on higher side – Imports of steel into the country remained at elevated levels in FY 2018 indicating that the trade remedial measures in place are ineffective. Flat products imports in FY2018 increased by 8% with imports of coated products surging by 93% and of colour coated products increasing by 169%.
With imposition of Section 232 in the US and rising trade measures in other regions, there is a likelihood of surplus steel tonnages finding their way into India.
10. Outlook for FY19 – Indian steel demand is expected to be strong on infrastructure projects coming up and increasing demand from automotive, yellow goods and appliances.
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