JSW Steel's production rises with ramp-up of capacity utilization to 96% in Jan '21

JSW has reported an increase in capacity utilization to 96% in Jan '21, as per the company's recent press release in BSE. The same stood at 91% in Q3 FY '21. The company also reported an increase in its production volume of crude steel and long products, while that of flat products went down on both monthly and annual basis.

Major takeaways are:

1.Crude steel output up by 2% y-o-y-JSW Steel reported crude steel production for the month of Jan '21 at 1.43 mn t compared to 1.41 mn t in Jan '20, showing a growth of 2% y-o-y. Also, on a m-o-m basis, it increased by the same number.

The gradual increase in the capacity utilization rate from the lows of 25-30% in Apr continued to support the higher production volumes.

2.Flat steel production down by 1% y-o-y-The production of flat rolled products declined marginally by 1% y-o-y at 1.01 mn t in Jan '21 compared to 1.03 mn t in the year-ago period. Also, the production volume posted a de-growth of 3% m-o-m against 1.04 mn t in Dec '20.

The company had announced two price hikes in the month of Jan '21 but later rolled over the prices for Feb '21 on weak buying interest and declining prices in the trade segment. Also, a few major OEMs cut-down on their procurements for non-critical projects on higher prices which further weighed on the production volumes of flat products.

3.Long steel production up by 5% y-o-y-JSW produced 5% more long products in Jan '21 at 0.36 mn t as compared to 0.34 mn t in Jan '20, indicating improved demand in the construction sector.The same reported an increase of 7% against 0.33 mn t in Dec '20 on a monthly basis.

Resumption of the stalled construction and infrastructure projects along with announcement of new projects during the month kept the demand for long steel supported. This in-turn, pushed the manufacturer to produce more during the month.

Outlook

The production volumes are poised to go up from here with the completion of the Dolvi plant expansion from 5 mt pa to 10 mt pa by (Jan-Mar) Q4 FY '21. Further, the 8 mt pa pellet plant in Vijayanagar is now under commissioning and the heating process has started.