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Informist, Friday, Jan. 24, 2025

 

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--JSW Steel: See iron ore capacity of Karnataka unit at 15 mln tn by FY26 
--CONTEXT: JSW Steel management comments in post-earnings call with analysts 
--JSW Steel: Highest ever domestic sales of 5.99 mln tn in Oct-Dec 
--JSW Steel: JSW One gross merchandise value annual run rate over INR 140 bln 
--JSW Steel: Seeing stable steel prices in Jan 
--JSW Steel: See reduced steel imports in Jan-Mar 
--JSW Steel: See coking coal prices lower by $10-$15 in Jan-Mar 
--JSW Steel: Steel consumption largely better in Jan 
--JSW Steel: See net debt-EBITDA ratio falling going forward 
--JSW Steel: Will close Jajang mine in Odisha in coming months 
--JSW Steel: Steel prices in US operations may improve 
--JSW Steel: Jajang mine has low reserves and low grade iron ore 
--JSW Steel: Have iron ore resources in excess of 1.6 bln tn 
--JSW Steel: Iron ore prices under pressure due to supply issues 
--JSW Steel: Produced 6.3 mln tn iron ore in Oct-Dec 
--JSW Steel: Looking to source iron ore from Maharashtra for Dolvi unit 
--JSW Steel: See iron ore captive capacity going up to 28 mln tn by FY26 

 

By Aman Aryan and Narayana Krishna 

 

MUMBAI – JSW Steel Ltd. expects its captive iron ore production capacity to increase to over 28 million tonnes, including the capacity in Goa, by 2025-26 (Apr-Mar) amid increasing iron ore prices, the company's management said in a post-earnings conference call on Friday. A sequential rise in prices of iron ore, a crucial raw material for the company, in the December quarter partially offset the benefits from the fall in prices of coking coal, another critical raw material, as per the company's investor presentation.

 

The 28-million-tonne expected captive iron ore capacity includes 15 million tonnes of capacity from Karnataka and 12 million tonnes of capacity from Odisha. The steel-maker's captive iron ore capacity stood at 25.9 million tonnes, according to the company's annual report for FY24. JSW Steel's captive use of iron ore stood at 39% during the December quarter, the management said, adding that the company produced 6.3 million tonnes of iron ore in this period. 

 

Prices of iron ore have remained under pressure due to supply side issues, but it is expected to see some corrections going forward, the company said. Iron ore prices have been reduced once in January, and another price cut is expected in February after the Odisha mine auction, the management said. Talking about the Odisha-based Jajang mine, the management said the final mine closure plan has already been given, and it is expected to be closed in the coming months.

 

In August, the company had submitted a notice to surrender its mining rights at Jajang mine as it had become a drag on the company's costs. The steel-maker is not inclined to bid for the mine in case of any re-auction due to the low reserves and low-grade iron ore in the pit, the management said. However, this is not only the case with Jajang mine. Iron-ore grades have been deteriorating in certain other mines as well, hence the company is looking to avail some available technological facilities that have the ability to upgrade the ore, the management said. As of now, the company has resources in excess of 1.6 billion tonnes, it said.

 

JSW Steel has been exploring options to source iron ore from Maharashtra for its Dolvi plant, the management said. However, there are some logistical challenges with this option, the company said.

 

The company expects coking coal prices to fall further by $10-$15 during the March quarter. JSW Steel benefitted from a $34 fall in coking coal prices in the December quarter, the management said. "...think the prices (of coking coal) will remain subdued for the foreseeable future," the management said.

 

While the company's earnings for the December quarter was hit by lower sales realisation, its sales volume rose 12% on year to 6.71 million tonnes. JSW Steel reported its highest ever quarterly domestic steel sales of 5.99 million tonnes for the December quarter, the management said. The share of steel sales to the retail segment rose to 36% in Oct-Dec from 33% a year ago, while shares of other segments such as automobile, industrial, construction, and infrastructure fell compared to the year-ago quarter, according to the investor presentation.    

 

Steel prices, which have been a deciding factor for the company's earnings, have likely improved in January, the company's management said, adding that the company's US operations could also see some improvement in steel prices going forward.

 

Talking about consumption, the management said it expects steel consumption to improve in the March quarter, aided by a rise in capital expenditure by the government. The company had earlier said overall steel consumption grew 6.8% in the December quarter to 38.46 million tonnes. This growth was slower than the 13.6% growth seen in the first half of the current financial year. JSW Steel estimated a 10% growth in the overall steel consumption for FY25. The management said consumption has likely improved in January so far.

 

Steel imports are expected to fall in the March quarter, the management said. India was a net steel importer in the nine months ended December as it imported 8.21 million tonnes of steel during the period, while it exported just 1.82 million tonnes, JSW Steel's management said.    

 

JSW Steel's consolidated net debt fell to INR 809.21 billion as of Dec. 31, down by INR 18.84 billion from the previous quarter. As of Dec. 31, the company's net debt-to-earnings before interest, tax, depreciation, and amortisation was at 3.57, up from 3.51 at the end of the previous quarter, according to the investor presentation. The management said it expects an EBITDA-based correction in the company's net debt-to-EBITDA going forward, due to likely increased volume from JSW Vijaynagar Metallics Ltd.   

 

For the December quarter, the company's digital marketplace JSW One recorded 483,000 tonnes of steel volumes and 59,000 tonnes of cement volumes. The steel volumes were up 25% on quarter and cement volumes were up 33%. The company holds 62% stake in the platform. The platform's gross merchandise value for the December quarter rose 2.4 times on a year-on-year basis. The platform's gross merchandise value annual run rate crossed INR 140 billion, marking a growth  of 2.7 times from FY24 and 10.1 times from FY23.

 

The steel-maker posted a 70% on-year fall in its consolidated net profit for the latest quarter to INR 7.17 billion. Its consolidated revenue fell 1% on year to INR 413.78 billion. On Friday, shares of the company closed at INR 932.45 on the National Stock Exchange, up 0.3%. The company detailed its earnings for the December quarter post market hours on Friday.  End

 

US$1 = INR 86.21

 

Edited by Tanima Banerjee

 

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