India: JSW Steel's production, sales decline q-o-q in Q1FY'25

Indian steel major, JSW Steel has posted q-o-q decline in crude steel production and sales in first quarter of financial year 2025 (Q1FY'25). The performance was impacted by lower volumes due to maintenance shutdown at Dolvi and Bhushan Power & Steel Limited (BPSL) and inventory losses. The company's production guidance for FY'25 remains on track at 28.4 mnt, sales guidance at 27 mnt, BigMint learnt from company's investors call held on 19 July. The steel major is committed to achieve net zero emission by 2050.

The capex spent during the quarter was INR 4,466 crores and an upfront payment of INR 228 crores was made for coking coal mines. The capex for FY'25 stands at INR 20,000 crores.

Highlights-

Crude steel production drops q-o-q: JSW Steel's standalone crude steel production dropped 7% q-o-q to 5.30 mnt in Q1FY'25 from 5.69 mnt in the previous quarter. Production dropped q-o-q due to planned maintenance shutdowns at Dolvi and BPSL. Likewise, output was down by 3% y-o-y from 5.44 mnt in the same period last year. The company's average capacity utilisation was 87% during the quarter.

Steel Sales down q-o-q: The company's sales witnessed drop of 11% q-o-q to 5.09 mnt in Q1FY'25 against 5.69 mnt in the previous quarter. Meanwhile, sales rose 3% y-o-y from 4.93 mnt in Q1FY'24. The share of exports fell to 10% during the quarter due to weak international market against 15% in CPLY and 20% in previous quarter.

Operating EBITDA falls q-o-q: The company's operating EBITDA fell 4% on the quarter to INR 4,275 crores in Q1FY'25 against INR 4,442 crore in Q4FY'24. On y-o-y basis, the same declined by 12% from INR 4,861 crore in the CPLY.

Update on key projects-

• The sinter plant and blast furnace at Vijayanagar works are expected to be commissioned by end of July 2024 and Steel Melting Shop (SMS) shall be commissioned by end-August 2024.
  
  
• 1.5 million tonnes per annum (mtpa) coke oven capacity commissioned at Vijayanagar works and phased commissioning of 1.5 mtpa coke oven shall be done from Q2FY'25.
  
  
• The gradual ramp-up of BPSL phase-II expansion to 4.5 mtpa is expected by Q3FY'25 and the balance 0.5 mtpa capacity will be achieved through debottlenecking by FY27.
  
  
• Dolvi's phase-III expansion: Long lead-time items have been ordered and Letters of Credit (LCs) have been established. The project is expected to be completed by September 2027.
  
  
• Other projects: The equipment erection for Colour Coating Line in Jammu & Kashmir is nearing completion and expected to be start commissioning by Q2FY'25.
  
  

Steel prices, NSR: Domestic flat steel prices increased in April and May but declined in June due to low-priced imports from China and FTA countries. The company's export realisations improved q-o-q due to a better product mix. Long steel prices also rose in April and May but tapered off in June due to supply challenges.

Net sales realisations (NSR) at Indian operations fell 5% y-o-y on lower domestic steel prices, but up by 1% q-o-q on better product mix.

Value added product mix: The share of value-added and special products of total sales was highest ever in Q1 at 64% (3.81 mnt), registering 13% y-o-y growth from 61% in the CPLY. In addition, the company has also recorded highest ever sales in renewable segment, up 130% y-o-y.

Lower coking coal costs: Coking coal costs decreased by $23/t in the quarter, aligning with previous guidance. The company anticipates further benefits from lower coking coal and iron ore prices in the next quarter.