India: JSW Steel aims at 23% higher domestic sales from Vijayanagar in Sept

JSW Steel is steadily bringing its exports volume down over August and September from its flagship Vijayanagar plant in Bellary, Karnataka. The steel giant has set an exports target of 1.6 lakh tonnes for September, 2020 and if this target is met fully then it would be 36% lower compared to the actual volume of 2.5 lakh tonnes it exported in August, 2020. On a month-on-month basis, the exports volume in August were lower by almost 36% against the actual 3.9 lakh tonnes it had exported in July, 2020.

JSW Steel's exports percentage will be reduced gradually to 15% in FY21.

Domestic sales

On the other hand, the company is looking at a larger domestic play with a targeted month-on-month 23.43% increase in despatches at 7.9 lakh tonnes in September this calendar. The actual domestic despatches in August, 2020 were at 6.4 lakh tonnes against the targeted 6.8 lakh tonnes but up 29.3% m-o-m over July. In July, domestic targets and despatches were both at 4.95 lakh tonnes.

Compared to July, September's domestic sales target have been increased by almost 60%.

Speaking to SteelMint an industry source said that "JSW Steel's focus is on domestic sales as demand has shot up and better margins are available here compared to exports".

An analyst said that domestic steel margins in the industry are up by Rs 7,000 per tonne compared to export prices in July, when export volumes were high. "Today's domestic prices are higher by Rs 7,000/tonne versus export prices in July," revealed the analyst.

Domestic demand in all steel-consuming segments is rebounding after the lockdown, when consumption had fallen to almost nil in certain sectors. Construction is expected to come back 100% after the monsoons are over.

Total despatches

JSW Steel has also rolled over its total despatch volumes target from August to September at 9.5 lakh tonnes (1.6 lakh tonnes of exports and 7.9 lakh tonnes of domestic sales). In August the actual despatch volumes fell short of the target by 6.32% to 8.9 lakh tonnes.

Capacity level increased

It is also learnt that the steel major's Vijayanagar plant has begun operating at 90-92% capacity after being ramped up to 85-90% capacity in July. Previously, production per day had to be reduced by 75-80% when COVID-19 cases were detected at the plant in June. But JSW Steel has firmly put that behind and moved on. The plant has a hot metal production capacity of 33,000-34,000 tonnes per day (tpd) and a total capacity of 12 million tonnes (mn t) per annum, though, after wastage etc, it touches around 11 mn t.

~ Madhumita Mookerji