India: JSW Steel Jul'21 capacity utilisation at 92%, crude steel production up

One of India's primary steel majors, JSW Steel, recorded a marginal 1% growth in its average capacity utilisation rate to 92% in Jul'21, against 91% seen in Jun'21, SteelMint learned from the company's recent BSE filing.

On a y-o-y basis, the capacity utilisation rate increased 9% against 83% in the same period last year.

Crude steel production up 1% m-o-m: Crude steel output stood at 1.382 mn t in Jul'21, up by a mere 1% m-o-m against 1.362 mn t in June. Meanwhile, on an annualised basis, the output jumped 11% as compared to 1.246 mn t in Jul'20.

Flat-rolled production down 5% m-o-m: Flat-rolled production stood at 0.934 mn t in Jul'21, down by 5% m-o-m compared to 0.984 mn t The same moved down by 1% against 0.940 mn t in Jul'20.

The lead reason behind the decline in production has been the planned maintenance shutdown of steel melting shop (SMS) at the Vijayanagar plant.

JSW Steel will go for a 75-day maintenance shutdown of the steel melting shop (SMS) at its flagship Vijayanagar works, beginning 15 Jul'21. The "planned" move will stretch over three periods of 25 days of shutdowns punctuated by two 10-day "cooling off" periods. The total shutdown will thus continue till almost end-Sept - so in total 75 days. Importantly, the shutdown will lead to more than 2.50 lakh tonnes of production getting impacted with 3,500 tonnes per day of output loss, as reported earlier by SteelMint.

Long-rolled production down 3% m-o-m: JSW produced 0.306 mn t of long steel in Jul'21, down 3% in comparison with 0.314 mn t a month ago.

The monsoon-led disruptions and strict norms on containment of Covid-19's second wave in some provinces can be factored in for the low demand for long products from the construction and infrastructure projects. On the other hand, the output of long steel rose by 28% y-o-y against 0.240 mn t in Jul'20.

Factors driving higher production

1. Recovery in the domestic market: Increased vaccination campaigns by the government has encouraged labour hands to return to work gradually, thus, boosting the demand for steel products from the construction and infrastructure sector. Moreover, amid improved demand, white goods manufacturers have posted better results. For instance, in Q1FY'22, Whirlpool of India reported a 62% jump in profits at INR 25.5 crores compared to the preceding quarter.

2. Robust demand in overseas markets: India's finished steel export volumes rose by 11% m-o-m to 1.512 million tonnes (mn t) in Jul'21 as against 1.368 mn t seen in the previous month, according to recent provisional data released by the Joint Plant Committee.

Sluggish demand and limited buying in the domestic market owing to the second wave of Covid and seasonal lull due to the monsoon led to a shift in the interest of steelmakers towards exports. Also, JSW Steel, in its recent investor's call held on 23 July, highlighted that export volumes have reported a sharp growth of 16% q-o-q in Q1 FY'22.