JSW Steel to focus on exports and cut costs
2020-05-28 09:09:59 [Print]
India's JSW Steel Ltd. will focus on exports, cut costs and delay expansions as the COVID-19 pandemic slashes demand at home.
Once a bright spot for global demand, steel consumption in India plunged 91% last month while crude steel output tumbled 70% as a nationwide lockdown to combat the pandemic halted activity across industries.
Recovery in India's demand will be gradual and may only gather pace in the second half of the year started April as the industry is facing shortages of labor, logistics and liquidity, according to JSW Steel's joint managing director Seshagiri Rao.
With India's steel consumption forecast to decline by 10% this financial year, the steel mill will focus on exports for at least the next six months, he said. A drop in local iron ore prices and imported coking coal rates, together with a weaker Indian currency will make exports more competitive, he said. The steel mill plans to export more than the 3.1mn tonnes of value-added products it shipped out last year, to countries in Asia, the Middle East and Africa.
JSW Steel, which operated its plants at 38% capacity in April, has now ramped up capacity to 85% this month and aims to produce 16mn tonnes of crude steel this year.
The company, which last week posted an 85% plunge in its January-March quarterly profit, has identified key areas for reducing costs and deferred the doubling of capacity at its Maharashtra plant by half a year. It has also put on hold a $150mn modernization plan for its US plate and pipe mill.
The company has cut its capital expenditure by 45% to Rs90bn ($1.2bn) and has pushed back plans to expand capacity to 23mn tonnes in India to March 31 next year, from before September.
It's seeking to lower freight costs for purchases of bulk raw materials and is targeting a 10% reduction in fixed costs.
The mill aims to potentially boost production from its own iron ore mines to 23mn to 24mn tonnes this year from its newly acquired Odisha blocks and Karnataka. The company's total iron ore requirement will be 30mn to 32mn tonnes this year.
Once a bright spot for global demand, steel consumption in India plunged 91% last month while crude steel output tumbled 70% as a nationwide lockdown to combat the pandemic halted activity across industries.
Recovery in India's demand will be gradual and may only gather pace in the second half of the year started April as the industry is facing shortages of labor, logistics and liquidity, according to JSW Steel's joint managing director Seshagiri Rao.
With India's steel consumption forecast to decline by 10% this financial year, the steel mill will focus on exports for at least the next six months, he said. A drop in local iron ore prices and imported coking coal rates, together with a weaker Indian currency will make exports more competitive, he said. The steel mill plans to export more than the 3.1mn tonnes of value-added products it shipped out last year, to countries in Asia, the Middle East and Africa.
JSW Steel, which operated its plants at 38% capacity in April, has now ramped up capacity to 85% this month and aims to produce 16mn tonnes of crude steel this year.
The company, which last week posted an 85% plunge in its January-March quarterly profit, has identified key areas for reducing costs and deferred the doubling of capacity at its Maharashtra plant by half a year. It has also put on hold a $150mn modernization plan for its US plate and pipe mill.
The company has cut its capital expenditure by 45% to Rs90bn ($1.2bn) and has pushed back plans to expand capacity to 23mn tonnes in India to March 31 next year, from before September.
It's seeking to lower freight costs for purchases of bulk raw materials and is targeting a 10% reduction in fixed costs.
The mill aims to potentially boost production from its own iron ore mines to 23mn to 24mn tonnes this year from its newly acquired Odisha blocks and Karnataka. The company's total iron ore requirement will be 30mn to 32mn tonnes this year.
