India: JSW's crude steel output, sales decline q-o-q in Q1FY24

Indian steel major JSW Steel expects to achieve 37 million tonnes (mnt) of crude steel production (including Bhushan Power and Steel Ltd, Vijaynagar plant and JISPL) by financial year 2025 (FY25).

The impact of major raw materials like iron ore prices that were high was mitigated by the coking coal prices. Even when the coking coal prices were $285/t, up by $11/t q-o-q than prices in Q4FY23, SteelMint understands. The coking coal prices are expected to fall by $40-50/t in Q2.

Capacity expansion status:

Out of the INR 18,800 crore planned capex for FY24, the steel major has spent INR 4,094 crore in Q1FY24.

The expansion of 5 mtpa brownfield at Vijaynagar is progressing well and the project is expected to be completed by the end of the current financial year.

JSW Steel coated products has commissioned the colour coated steel line of 0.25 mtpa at Rajpura in May. The colour coated steel line in Jammu & Kashmir is likely to be completed in the March quarter of the current financial year.

The Phase-II expansion at Bhushan Power and Steel from 3.5 mtpa to 5 mtpa is progressing well and is likely to be completed towards the end of the current financial year.

Highlights

1. Crude steel production falls q-o-q: The company's standalone crude steel output stood at 5.44 mnt in Q1FY24, fell by 3% q-o-q from 5.60 mnt in Q4FY23. However, it rose by 9% y-o-y compared with 5 mnt. The company had taken certain scheduled shutdowns at Indian operations during the quarter. Hence, the average capacity utilisation for Q1FY24 was 92% compared to 96% in Q4FY23.
   
   
2. Steel sales decline q-o-q: Steel sales registered a decline of 13% q-o-q to 4.93 mnt in Q1FY24 from 5.68 mnt in Q4FY23 primarily due to channel de-stocking and exports impacted by delayed loading due to the cyclone on the western coast of India towards the end of the quarter. However, it increased by 22% y-o-y, against 4.03 mnt in Q1FY23. Export volumes were around 15% of sales.
   
   
3. Operating EBITDA drops 22% q-o-q: The company posted an operating EBITDA at INR 4,861 crores for Q1FY24, a reduction of 22% q-o-q but higher by 45% y-o-y. The EBITDA margin for the quarter was 14.8%. The EBITDA was lower q-o-q primarily due to lower sales volumes and higher iron ore cost, partially offset by lower coal cost, power and fuel costs.
   
   
4. Net sales realisation (NSR) drops q-o-q: Net sales realization at Indian operations were lower by 15% y-o-y. However, it is higher by 1% q-o-q due to higher exports realizations. Auto contracts are under negotiations which could support overall prices.
   
   
5. Increased inventories: The inventory levels held by the company went up by 3,30,000 t in Q1FY24. This could be attributed to the cyclone on the western coast of India towards the end of the quarter.