India: JSW Steel sets 10% higher Dec sales target

JSW Steel has set a total sales target of 9.60 lakh tonnes for the month of December, 2020, from its flagship Vijayanagar Works in Bellary, Karnataka, which is a little more than 10% higher than the actual 8.64 lakh tonnes that were despatched in November, 2020. Within the corpus of 9.60 lakh tonnes, the company is aiming to sell the lion's share of 8.45 lakh tonnes in the domestic market and the balance 1.15 lakh tonnes as exports. The exports are probably part of orders booked previously.

Month-on-month (m-o-m), actual total despatches in November, 2020, at 8.64 lakh tonnes, were marginally higher by a little over 1% from October 2020's achieved total sales of 8.54 lakh tonnes.

In November, export despatches from JSW Steel's Vijayanagar plant were almost 6% lower m-o-m at 1.09 lakh tonnes against October's 1.16 lakh tonnes. Domestic sales in November, at 7.55 lakh tonnes, were a little over 2% higher m-o-m from October's 7.38 lakh tonnes.

Focus on the domestic market

As with all mills, JSW Steel too is concentrating heavily on the domestic market, where prices are fetching better margins. In fact, hot rolled coil prices seem to be on fire. They hit a 12-year high after going up by INR 2,500 per tonne with the the onset of December. What's more, these prices are bracing for another price hike in the current month by at least another INR 1,500 per tonne. The factors that are fuelling this price hike include rising domestic demand and raw material (iron ore) prices as well as higher international prices even as mills have slowly returned to almost full production capacity in many cases. Of late, JSW Steel's Vijayanagar plant is operating at almost 90% capacity, it is learnt.

BPSL offer

Meanwhile, JSW Steel, perhaps in a move to hasten closure of the deal to acquire the stressed Bhushan Power and Steel (BPSL), has decided to offer an additional payment of INR 400 crore over and above the earlier bid of INR 19,350 crore, it has been learnt. The steel major is hiking the deal size by offering this INR 400 crore from the EBITDA of BPSL generated during the insolvency period. As per the approved resolution plan, the entire EBITDA generated by BPSL during the insolvency period belongs to JSW Steel, a point that has been contested in the Supreme Court by BPSL's former promoter Sanjay Singhal.

With a sharp resurgence in domestic demand, post gradual lifting of lockdown measures across the country, coupled with government stimulus measures, steel manufacturers are now keen to move ahead with their expansion plans.

~ By Madhumita Mookerji