Even as Indian steel faces a downward price pressure owing to subdued demand, leading producer JSW Steel said prices will remain stable in the near-term despite an expected correction in coking coal prices from around USD 172/MT now.
After lying low for more than two years on account of burgeoning predatory imports and subdued domestic demand, steel prices started steadily picking up from July-August last year in sync with the increasing trend globally. With domestic market well-protected, Indian firms found it convenient to jack up prices.
Indian steel firms raised prices in January as well by USD 37/MT for hot-rolled coil, the benchmark steel product. JSW believes that there is a scope for effecting a moderate increase in February as well, as domestic steel still comes at a discount to imported steel. However, market participants feel that since steel is being sold at a discounted rate at the retail level, a further increase will only prove counterproductive for the sector.
Moreover, imports are also inching up in recent times. Like others, the JSW management has also expressed concern, in a recent call with the analysts, over rising imports and stated that it would go back to the government authorities to plug any loophole that is helping outside steel to sneak in.
The government has never been a miser when it comes to protecting the steel industry. Sources said provisional anti-dumping duty imposed on various steel products could be extended for a couple of months after their scheduled expiry later in the current month. It is also expected to plug the “loopholes” that are helping imports in the days to come as well.
JSW Steel, however, maintains it FY17 sales volume guidance at 15 MnT even as its sales volume dropped in the third quarter of the current fiscal on account of lower sales volumes which could not be compensated fully with increased demand from original equipment makers. The realisation for the quarter, nonetheless, improved by INR 3,200-3,400/MT. Its export share also declined to 21% from 26% the previous quarter while the share of the value-added portfolio increased from 34% to 37%.
The company has also kept its FY’17 capex guidance unchanged at INR 43 bn, which includes capex towards iron ore mines as well.
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