JSW Steel expects scrapping of export duty on the metal soon and foresees that the price will remain “firm” with a revival in demand by 7-8 per cent in the second quarter of the current fiscal, a top company official said.
The industry witnessed a de-growth by 4.5 per cent in the domestic market in the April-June period of the 2022-23 fiscal, he claimed.
The steel major also said that there would be no “cut” in its capital expenditure (capex) plans for the purpose of growth, but only discretionary and non-essential special projects have been calibrated till the market situation normalises.
JSW had announced a reduction in capex by Rs 5,000 crore to Rs 15,000 crore in the current fiscal.
“Steel demand in the ongoing Q2 period is expected to be 7-8 per cent higher for the industry with a revival of re-stocking activity from July. Our profitability will also improve over the Q1FY’23.
“But the maximum benefit of raw material price moderation can only be realised in the September-December period,” JSW joint MD and Group CFO Seshagiri Rao told PTI in an interview.
JSW profit slumped 85 per cent in the April-June quarter to Rs 839 crore due to a “2.5-time jump in raw material cost, decline in steel prices and export duty”, he said.
Steel prices had corrected by 20 per cent in both domestic and international markets.
The largest domestic steel maker said prices will remain stable given the production adjustments in the global market.
Global steel production moderated by 12 million tonne in the month of June, including that of China, Rao said.
“But, our annual sales projection for FY’23 remains intact at 24 million tonne, which is 16 per cent higher than FY’22 as demand will catch up in the subsequent quarters. We are also expecting that the government will scrap steel exports duty soon to boost overseas shipment,” he said.
Indian steel exports declined by 26 per cent in the April-June quarter, while that of China grew by 54 per cent to 20 million tonne.
Rao said there are “no cuts in normal and growth capex” but there are projects which are not urgent and can wait, only those “discretionary and small special projects had been calibrated for the time being”.
JSW has plans to raise its production capacity to 37 million tonne by 2025 from 27 million tonne now.
The capacity augmentation is “well on track” and there is “no impact” on the target with capex calibration for the year, the official said.
Elaborating on its Odisha greenfield project, JSW Utkal Steel, Rao said that investments worth Rs 4,500 crore in mine, slurry pipeline and beneficiation plant works are under progress and the integrated steel plant will come up subsequently.
The 5-million tonne brownfield project at Vijayanagar will be completed by FY’24, the official said.
The Bhushan Power & Steel expansion to 3.5 million tonne in the first phase will be completed by September 2023 and to five million tonne by FY24, he added.