India’s third largest steelmaker, JSW Steel Ltd, expects to make yet another round of price increases next month, by around five per cent or around Rs 2,000 a tonne. This at a time when raw material prices are set to soften, in the October-December period.
According to JSW officials, coking coal contract prices for the quarter ending December 31 are expected to fall to as low as $200 a tonne from about $225 a tonne in the current quarter, in line with benchmark prices arrived at by Japanese steel mills and large suppliers. Iron ore prices may fall by 20 per cent to $120 a tonne from $150.
JSW Steel gets about 17 per cent of its iron ore supplies from own mines and buys the rest from other suppliers, including NMDC Ltd, Asia’s third-largest coal producer. JSW imports all its coking coal needs from abroad.
Indian steel companies had raised prices in September by three to four per cent, on firm global rates and rising input costs. And, had indicated that rates would be on an uptrend.
The demand uptake in India is being led by consumer durables and auto sectors but JSW officials feel demand from infrastructure and real estate would also contribute in the coming quarters.
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“We are seeing 10 per cent-plus consumption in India. We expect demand to pick up in long products now. The next six months’ consumption will be much, much better,” joint managing director M V S Seshagiri Rao told reporters on Thursday.
JSW’s inventory levels in July-September were down by 100,000 tonnes, indicating a pick-up in demand, said Rajeev Pai, Chief Financial Officer, adding current inventory was around 400,000 tonnes.
With much-needed cash infusion taking place from JSW’s Japanese partner, JFE, the company is embarking on a three-pronged strategy that include balance sheet management and deleveraging, improving operational efficiencies and aggressively pursuing expansion.