20 Things SteelMint Learned from JSW Steel Q3FY20 Results
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JSW Steel- one of India's largest steel producers with an installed steel-making capacity of 18 MnT pa announced its Q3 FY20 results today. SteelMint attended the conference call and below are the highlights of it-
Crude steel output up by 5 % Q-o-Q in Q3 FY20- JSW steel's crude steel production increased by 5% to 4.03 MnT in Q3 in comparison with 3.84 MnT in Q2. However on 9MFY20 the same stood at 12.09 MnT inching down by 3 % as compared to 12.52 MnT in similar quarter.
Saleable steel sales increased by 12% Q-o-Q in Q3 FY20-The producer's saleable steel sales increased by 12% to 4.03 MnT in Q3 against 3.60 MnT in previous quarter. Meanwhile, the saleable steel sales inched down by 1% to 11.38 MnT in 9MFY20 in comparison with 11.46 MnT in similar time frame of previous year.
Company's share of exports down in Q3FY20- In Q3FY20 company's exports accounted for 24% share in shipments against 31% in Q2 FY20.
Company's domestic sales volumes up by 25% Q-o-Q in Q3FY20- JSW reported increase in domestic shipments by 25% on quarterly basis to 3.08 MnT in Q3 against 2.47 MnT in Q2FY20. Meanwhile automotive steel sales grew by 10% Q-o-Q, despite an overall decline in passenger and commercial vehicle by 13%. Also share of value added and special product increased to 50% from 46% in Q2
JSW Steel inventories drop by 245,000 MT in Q3 FY20 - The company reported drop in inventories from 13,23,000 MT in end Q2 FY20 to 10,78,000 MT by end of Q3 FY20.
Retail sales increase by 33% in Q3FY20- Overall retail sales surged by 33% on quarterly basis driven by strong restocking demand. However, the same increased by 16% on yearly basis.
JSW coated production and sales output up in Q3FY20- JSW steel coated products output stood at 0.47 MnT in Q3FY20 which was 0.42 MnT in previous quarter. Meanwhile sales stood at 0.52 MnT in Q3 against 0.43 MnT in previous quarter.
JSW keeps steel production & sales guidance unchanged for FY20- Company shall successfully accomplish sales guidance at 15.5 MnT and production guidance by 16.5 MnT by end of FY20.
Company's operating EBITDA down by 5% Q-o-Q in Q3 FY20- The company's standalone operating EBIDTA stood at INR 2,667 Cr fell by 5% against INR 2,796 Cr in preceding quarter.
Blended NSR fell by 7% on quarterly basis - Blended Net sales realization fell by 7% on quarterly basis and 23% on yearly basis due to falling steel prices in Sep and Oct months. Also prices of auto sales contracts reduced by around INR 6000/MT. However with the uptrend in international prices and increase in steel prices from Nov'19 on wards blended NSR shall improve in upcoming quarter over increase in prices.
Domestic steel prices are cheaper than landed cost of imports- Domestic steel prices are still trading at discount of 5-6% as compared to landed cost of imports. Thus, there will be further scope of revision in domestic steel prices. Also, company officials shared that domestic steel prices will increase further in Feb'20 owing to restocking demand in domestic market.
Cost of production fell in Q3 FY20 - JSW Steel's cost of production fell by 5% Q-o-Q in Q3 FY20 amid lower cost of key raw materials like iron ore and coal.
Expect domestic iron ore prices to correct - With the Odisha mine auctions underway, and considering the iron ore inventory lying in mines might result to correction in domestic iron ore prices in upcoming quarters.
JSW to begin mining operations soon at its 6th 'C' category mine - The company is all set to start iron ore mining operations at its 6th 'C' category mine that it won in auctions. Production from captive Iron ore mines stood at 1.22 MnT in Q3 and 3.26 MnT in 9M FY20. Company expects captive iron ore production to be around 4.5 MnT in FY20 and around 7 MnT in FY21.
Production from Monnet's blast furnace expected to restart in Q4 FY20 - JSW Steel has already started preheating the blast furnace and plans to start production from Monnet's blast furnace along with one of SMS shop in Q4 FY20. Also repair works and modifications were carried out in BF,SMS and Mills to improve reliability of operations and reduce the cost.
Monnet sponge production up in Q3 FY20 - Monnet recorded pellet production of 388,000 MT and DRI production of 217,000 MT in Q3 FY20. In Q2 FY20, production figures were recorded at 410,000 MT for pellet and 182,000 MT for sponge.
Regarding ongoing NCLAT case of Bhushan Power and steel acquisition- NCLT case hearing for Bhushan Power & Steel is still awaited as next hearing is scheduled on 30th Jan'20 and hoping to resolve quickly by the month of Feb'20.
Delay in JSW Dolvi expansion project commissioning - Commissioning of Dolvi plant is delayed by 3 to 6 months and is expected to get commissioned by first half of FY21 owing to heavy rainfall which impacted the operations and construction activities of all locations.
Expect improvement in steel demand by 4%- Steel demand in India is expected to improve by 4% in this fiscal and shall expect further improvement by around 5-6% in upcoming fiscals.
Outlook- The Indian steel sector is expected to grow significantly on the back of various initiatives of the Government pertaining to the domestic infrastructure and supportive monetary policies.
