Govt owned SAIL (Steel Authority of India limited) has released their financial and operational results today. Company officials mentioned that inventory levels increased by 6 lakh tonnes on quarterly basis to 1.9 MnT in Q2 FY20. Company recorded its best ever Hot metal and crude steel production in Q2FY20.
Below mentioned are key highlights of today’s investor’s conference call :
1.Crude steel production fell by 1% in Q2FY20- On a quarterly premise, the company’s crude steel production inched down 1% to 3.89 MnT in Q2 FY’20 as compared with 3.93 MnT in the previous quarter. However, the same grew by 5% in Q2 FY’20 over 3.70 MnT in Q2 FY’19.
2.Hot metal production fell by 3% in Q2FY20- The manufacturer churned out 4.20 MnT of hot metal in Q2 FY’20, down by 3% in comparison with 4.32 MnT in the last quarter. However, the same increased by 6% in Q2 FY’20 as against 3.97 MnT in the corresponding quarter of FY’19.
3.Saleable steel production down by 3% in Q2FY20- The company’s salable steel in Q2 FY ’20, stood at 3.56 MnT down by 3% on a quarterly basis over 3.65 MnT in Q1 FY’ 20. However,the same inched up by 1% in Q2 FY’20 as against 3.54 MnT in Q2 FY’ 19.
4.Saleable steel sales down by 3% in Q2FY20- Company’s saleable steel sales stood at 3.148 MnT in Q2FY20 down by 3% as compared to 3.249 MnT in previous quarter.However on a yearly basis the same fell by 9% in Q2FY20 against 3.475 MnT in Q2FY19.
5.Company’s EBITDA declined by 25% Q-o-Q- The company’s EBITDA plunged by 25% to INR 1,322.00 Cr in contrast with INR 1,766.33 Cr in the previous quarter.However on a yearly basis the same plunged by 47% in Q2FY0 against INR 2,474 Cr in Q2FY19. Lower realizations in the domestic steel market amid falling steel prices and weakening buying interest among the end-users resulted to lower EBITDA in this quarter.
6.Steel prices decline in Q2FY20- The key consuming sectors including auto, infrastructure and manufacturing did not perform well in the quarter. At the same time,the prices have also faced continuing downward pressure. This has reflected in the results. Flat steel prices declined by around 60-90% as compare to long steel products.From Mar’19 onwards SAIL witness decline in its steel prices in the domestic market.
7. Long products price increased in Nov ’19- Company raised long products prices by INR 500-600/MT in Nov’19 over improved sentiments in domestic market.Also prices are expected to sustain in upcoming months.Also market is absorbing the prices and we are expecting quantity of sales to be increased in coming quarter.
8.Company’s expects improvement in demand in Q2- Considering the weak market sentiments and global consumption trends during the last few months, the overall margin of the steelmaker was affected.Owing to the extended monsoon season and low demand from the core sectors, the domestic steel demand was also affected.Thus company officials expect optimistic market sentiments and improved demand in Q3. Meanwhile with the improvement in demand prices may firm up which can generate positive numbers in Q3FY20.
9.Average NSR realizations- Average NSR realizations of flats & long steel both stood around INR 37,382/MT in this quarter.Also average realization in Oct’19 was close to INR 35,000/MT
10.Coking coal prices expected to fall in Q3- Coking coal prices have come down from USD 200/MT CFR levels to USD 130/MT CFR levels.However with the improvement in steel demand,coking coal prices may start to rebound simultaneously.
11.Expansion plans- SAIL,Bhilai steel plant expansion plans likely to get commissioned in FY 19-20.Company officials mentioned that converter- 3,wire rod mill and caster-4 is on developing stage.Out of which converter-4 will get commissioned by Feb ’20.Along with this wire rod mill will get commissioned by Mar’20.
12.Sales of plates & coils in retail segement – Sales of plates & coils in retail market stood at 0.7 MnT last year. However company is targeting for 1 MnT this year.
13. Destocking activities at dealers end – Dealers are destocking the material owing to low demand in the domestic market which is hampering sales volumes.However with an uptick in prices ramp up in sales is expected in upcoming months.
14.Techno economic parameter- Coke rate stood at 466 kg/thm in H1FY20. Meanwhile BF productivity stood at 1.69 T/m3/Day in H1FY20.
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