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JSW Steel increased exports during the March quarter

Jayant Acharya @ Image source

JSW Steel maintains its upbeat outlook for the local steel market for the fourth fiscal quarter, despite a worldwide rebound in steel prices and the approaching general elections in India. The company’s joint managing director, Jayant Acharya, sees a significant increase in steel volumes due to seasonal strength and higher worldwide prices.

A upward trend in steel prices has been seen in major markets such as the US, Europe, China, and Asian areas. It is anticipated that improved pricing would also result from this worldwide trend in the home market. In addition, a strong order book and a positive global climate are expected to propel steel exports upward in the January–March quarter.

Acharya expressed optimism that the medium-term demand for steel will be sustained by the government’s emphasis on public capital spending, manufacturing expansion, and energy transformation programs. This confidence stems from the expectation that India’s total steel demand will continue to grow over the next ten years.

JSW Steel’s domestic sales increased by over 5% year over year in the third quarter (October to December), totaling 5.8 million tonnes. The main cause of this growth was a rise in sales to business clients in sectors including packaging, renewable energy, and automobiles.

However, at the same time, exports—which totaled about 550,000 metric tons—only made up 9% of the company’s sales. This resulted mainly from Chinese producers’ aggressive price methods and muted international markets.

The firm had difficulties as a result of growing raw material costs; throughout the quarter, coking coal and iron ore prices both increased. Acharya said that there’s a good chance this pattern will continue in the current quarter. He was confident that greater export pricing, bigger volumes, and maybe better domestic market conditions would at least partially offset the impact of rising raw material prices.

The board of JSW Steel decided to raise 2,000 crore by issuing bonds in the domestic market to meet the company’s financial demands. This money will be used to finance capital expenditures and refinance debt that is about to mature. During the October–December quarter, the weighted average cost of debt for the corporation was 7.3%.

The business lowered its FY24 capital expenditure estimate from ₹20,000 crore to ₹18,000 crore. A timing problem that caused some cash flows to be distributed into the following months is the reason for this modification. During the April–December 2023 period, JSW Steel spent ₹13,250 crore on capital projects, which suggests a run rate of about ₹4,400 crore. Additionally, the business anticipates spending about ₹4,700 crore in the latter quarter of the fiscal year.

JSW Steel spent ₹5,253 crore on capital expenditures in the quarter that ended in December 2023, a considerable rise over the ₹3,800 crore it spent in the second quarter. This increase is a result of several expansion projects being given priority throughout the quarter.

Pradeep S

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