‘PRICES IN INDIA HAVE NOT GONE UP TO GLOBAL LEVELS’

JSW Steel recorded one of its best performances in the December quarter on the back of a strong demand environment. SESHAGIRI RAO, joint managing director and group chief financial officer, JSW Steel, tells Ishita Ayan Dutt that the market has recovered after hitting the bottom in Q1.

JSW Steel recorded one of its best performances in the December quarter on the back of strong demand, which led to a surge in prices causing discontent among user industries. In an interview to Ishita Ayan Dutt, JSW Steel Joint MD and Group CFO SESHAGIRI RAO pointed out that the market had recovered after hitting the bottom in Q1, and that the increase in global prices was much higher. Edited excerpts:

Is this the best quarterly results reported by JSW Steel?

In terms of Ebitda per tonne, this has been second best. However, from a consolidated and stand-alone Ebitda point of view, this has been the best quarter (in absolute terms).

Given the concerns raised by user industries on pricing, do you expect some policy action in the Budget?

We respect the concerns of user industries, but at the same time these should be based on facts. There cannot be wild allegations that steel prices have gone up in India, which is not correct.

We have been analysing India and global data for the last six months. In April, prices were at $394 a tonne; in December, it went up to $710 a tonne in China. There was an 80 per cent increase in steel prices in China.

US prices increased 119 per cent in the same period, and Europe prices 84 per cent; in India, the price was ~35,000 a tonne, which went up to ~53,000 a tonne in December — an increase of 51 per cent. If it is being said that steel prices are being increased, it means they expect prices not to rise locally even if they are rising globally. It is possible to do so if there is no cost pressure at all.

But losses declared by steel firms in the June quarter were over ~6,000 crore. Iron ore prices in the month of June were $82 a tonne and went up to $159 a tonne in December, an increase of 94 per cent globally.

In India, the NMDC price in June was ~1,960, in the month of December it was ~4,610, a 135 per cent increase. Prices in India have not gone up to the global level. Therefore, I do not expect the government to take any action with regard to steel duties on imports, based on the wild allegations that have been made. The duty is zero with FTA countries and 5560 per cent imports is at zero per cent duty.

Chinese prices have softened in the last few weeks and in India, secondary producers have reduced prices, do you see prices moderating?

TMT prices have come down right now for secondary players, but it does not indicate there is a problem in the market from the demand point of view. I don’t see a problem for primary producers with regards to demand and supply.

What kind of capacity addition are you looking at for Q1?

As far as upstream is concerned, there is some delay in the Dolvi project because we are not able to get equipment suppliers and also supervision and technology suppliers who have to come from overseas. Those issues are hitting us in completing the project by march 31, 2021 and it may slip to the next quarter (April-june).

But we are in the final stages of commissioning; majority of the units will be commissioned by March 31, 2021 and the entire five million tonne will be available for part of the year. The one million tonne additional capacity in Vijayalnagar will come in phases starting from Q1.

SESHAGIRI RAO Joint MD & Group CFO, JSW Steel

You have submitted an EOI for Uttam Galva, are you going to bid?

We are expanding upstream; five million tonnes at Dolvi and one million tonne at Vijaynagar and have taken some steps to increase our downstream. Any downstream like Asian Colour (which we took over), we will continue to evaluate. Keeping that in view, we submitted an EOI for Uttam Galva and are still evaluating the option.

What is the status of your bid for Gontermann Peipers?

Gontermann is strategically important for us and the country because there is no other roll supplier in India and that is why we have shown interest. We are awaiting response from the committee of creditors (COC).