JSW Steel is India’s largest steel producing company in terms of production. The company reported crude steel production of 3.91 MnT in Q1 FY18. Steel sales stood at 3.51 MnT in the same period.The steel maker reported EBIDTA of INR 2,198 crore in Q1 FY18.In the investors conference call conducted on 01 Aug’17, company announced quarterly results for Q1 FY18. Below are the highlights of the same:
1.FY18 production guidance at 16.5 MnT & sales guidance at 15.5 MnT- JSW Steel achieved 26%, Y-o-Y growth in its crude steel output in FY17 with output of 15.8 MnT. For this fiscal, the steel maker has set target for 16.5 MnT, up by 4.4% against last year’s output.
2. Domestic flat steel to remain high till September– On global perspective, steel prices are improving with upward pressure on iron ore & coking coal amid improved demand in China.In line with this, Indian domestic flat steel prices are also likely to remain strong in Aug-Sept amid higher export realizations.
3.Value Added steel ,galvanised steel, electrical steel segments performed very well – Coated products reported highest ever quarterly sales at 0.48 MnT and highest ever quarterly EBITDA INR 205 crore,. Sales of Coated products increased by 20%, Y-o-Y to 0.48 MnT in Q1 FY18. Production of galvalume & coated products to be increased as they are cost effective and yield higher output.
4.Cost of production moved up in Q1 FY18- NMDC did not reduce iron ore prices in Q1 FY18 resulting in higher cost of production. To the contrary international prices dropped in last quarter and also Odisha miners reduced offers.However,coking coal prices have increased in April owing to Debbie cyclone in Australia but later fell towards the quarter end with resumption in supplies.Hence cost of production remained on higher levels in Q1 FY18.
5.Ramp up of iron ore mine blocks awaits SC approval: Ramp up of 5 iron ore blocks that JSW Steel won in auctions will await SC decision on increasing iron ore production cap above 30 MnT. Currently in Karnataka iron ore production is close to 27-27.5 MnT ,however production is not coming up in line with the laid cap of 30 MnT pa. Although mining companies and Karnataka iron steel association has approached the Apex Court to increase in cap and the decision is still awaited by SC. JSW Steel plans to acquire more iron ore blocks in upcoming auctions.
6. Slurry pipeline to facilitate iron ore movement to JSW Vijayanagar: This will facilitate iron ore transport from coastal Karnataka to Vijayanagar plant. JSW Steel has proposed to lay a slurry pipeline for transportation of iron ore and coal in Karnataka at an estimated cost of INR 2,100 crores. This will facilitate transporting iron ore through slurry pipeline at a very competitive cost of alternate means of transport. This strategic project will enable the company to source current requirement of iron ore at Vijayanagar works from outside Karnataka either from imports or from Odisha /eastern sector at prices lower than the prevailing prices in Karnataka.
7. India’s finished steel consumption grew by 4.6% Y-o-Y– India’s finished steel consumption grew by 4.6% Y-o-Y to 21.01 MnT in Q1 FY18. As demand saw improvement in public sector spending in sectors like roads, power,solar energy ,earth moving equipments and pipelines.
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