India: JSW Steel records crude steel production at 1.377 mn t in Aug'21

JSW Steel, one of India's leading steel producers, has maintained capacity utilisation at 92% in Aug'21 for the second month in a row, SteelMint learnt from the company's recent BSE filing. However, the company's finished steel production was affected due to bearish market sentiments.

Operational highlights:

Crude steel production largely stable, m-o-m: Crude steel output stood at 1.377 million tonnes (mn t) in Aug'21, largely stable against 1.382 mn t in Jul'21. Meanwhile, on an annual basis, output rose by 5% as compared to 1.317 mn t in Aug'20.

Flat-rolled production down 4% on month: Flat-rolled production stood at 0.899 mn t, down 4% m-o-m compared to 0.934 mn t in Jul. The same moved down by 8% against 0.98 mn t in Aug'20.

Long-rolled production down 2%, m-o-m: JSW produced 0.301 mn t of long steel in Aug, down 2% in comparison with 0.306 mn t a month ago. However, on a y-o-y basis, production jumped 30% against 0.232 mn t in Aug'20.

Factors that determined JSW's performance in Aug:

1. Maintenance shutdown: JSW's production of flat rolled products went down last month, mainly due to a planned shutdown taken at one of its converters at Vijayanagar works, the company mentioned in its press release.

Earlier in Aug, SteelMint reported that JSW Steel will go for a 75-day maintenance shutdown of the steel melting shop (SMS) at its flagship Vijayanagar works, beginning 15 Jul. The "planned" move is supposed to 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 75 days in all. Importantly, the shutdown will lead to more than 2.5 lakh t of production getting impacted with 3,500 t per day of output loss.

2. Weak seasonal demand: Generally, in India, Jul-Sept is a the peak monsoon period, thus, demand for long steel from construction activities remained on the lower side.

In addition, concerns around the second wave of Covid-19 and the anticipation of an outbreak of the third wave weighed on domestic trade activities.

3. High prices weigh on buying intent: The end-users in both the overseas and domestic markets showed less interest in procurement due to high steel prices. For instance, the monthly average SteelMint benchmark HRC (IS 2062, 2.5-8mm) prices stood at around INR 66,500/t exy-Mumbai in Aug'21 compared with INR 64,800/t exy-Mumbai a month ago. Also, by mid-Aug, the steel manufacturer had lifted-off the rebates announced earlier in the month.