Indian steel major JSW Steel, in its recent investors call, mentioned that during the Jul-Sept’21 second quarter India witnessed weaker demand owing to the monsoons. However, demand in Q2FY’22 was good, backed by strong manufacturing activities, lower interest rates and government focus on infrastructure spending.
The steel major recently installed the largest blast furnace along with steel melting shop (SMS) with two converters of 350 tonnes each through which it will incrementally produce 1.5 million tonnes (mn t) and sell around 1.4 mn t. Further, the company is optimistic about ramping up its capacity.
Key projects in the pipeline
a. A 5-mn t/year brownfield project at Vijayanagar will be completed by FY’24.
b. Commissioning of the second line at CRM-1 at Vijayanagar is likely by Q3FY’22.
c. A 0.45-mn t/year galvanising line at Vasind is to be commissioned in Q3FY’22.
d. A 0.5-mn t/year continuous annealing line will be commissioned by Mar’22.
e. The second 0.25-mn t/year tin plate line at Tarapur is likely to commence by Jun’22.
Other highlights
Net sales realisations up 5% q-o-q: The company’s blended net sales realisations (NSR) went up 5% on the quarter, but the cost pressure remained high because of the following factors:
a) Increase in coking coal prices globally was about $30/t q-o-q, which pushed the production costs higher. Further, the steel major looks ahead to disseminate this increase in production cost in the spot market.
b) Iron ore prices remain elevated in the domestic market, showing an increase of 19% q-o-q in Q2FY’22.
Export sales up 22% q-o-q: JSW Steel’s export sales were recorded at 38% of the total sales in Q2FY’22, marking a 22% q-o-q growth. The company shifted its focus to exports due to subdued demand in the domestic market.
Average capacity utilisation stable q-o-q: The capacity utilisation rate stood at 91% in Q2, unchanged against Q1 due to planned shutdowns at the Vijayanagar and Salem works. The manufacturer’s standalone crude steel production hovered at around 4.10 mn t, at par with Q1. Along with this, flat steel production stood at 2.79 mn t and long steel production was at 0.92 mn t in Q2.
Steel sales increase 5% in Q2: The company’s steel sales stood at 3.79 mn t in Q2FY’22, up 5% q-o-q, as Q1 FY’22 was impacted by the second wave of Covid in India. Flat steel sales stood at 2.61 mn t while longs were at 0.95 mn t in Q2.
JSW Steel Coated Products performance: During the quarter, JSW Steel Coated Products (GI/GL+tin) registered a consolidated production of 0.75 mn t while sales volumes stood at 0.82 mn t in Q2FY’22 mn t. In Q1, the production volumes were at around 0.66 mn t and sales at 0.70 mn t.
Automotive sales report 9% increase q-o-q: JSW Steel’s domestic automotive sales increased by 9% q-o-q.
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