Steel sector Q3 net zooms 817%

The steel sector has posted a 817 per cent jump in net profit on a sales increase of 27 per cent in the third quarter of current fiscal following better price realisation and cost control.

A study of steel majors"" Steel Authority of India Ltd (SAIL), Tata Steel, Ispat Industries, Jindal Vijaynagar Steel Ltd (JVSL) and Essar Steel, showed that their combined net profit at Rs 1,417 crore compared with Rs 154.5 crore during the same period. Net sales were at Rs 11,272.9 crore compared with Rs 8,842 crore.

In the last nine months, some companies such as JVSL and Ispat reverted to black and Essar Steel minimised losses. Tata Steel's net profit in the last nine months at Rs 1,117.34 crore was higher than the net profit for 2002-03 at Rs 1,012.31 crore.

Market sources tracking the sector said though price hikes were a part of the reason behind the improved performance, better product mix and higher volumes also attributed to it significantly. They added, going forward, the integrated players will be better poised to take full advantage of price hikes owing to rising input costs.

Industry sources said the cost of scrap had gone up from $250 to $310 and the cost of metcoke (metullargical coke), which was an important ingredient, had gone up in the last three months from $160 to $350.

The cost of logistics had also shot up. The industry expect a further price increase in the coming months owing to rising input costs. Raw material prices are increasing on a weekly basis in the international market.

China has already cut down on coke exports with its increasing requirements. Further, the flooding of Australian mines also added to the problem. Sources said India will probably have to enter into a bilateral agreement with China, for a barter arrangement.

The Chinese steel makers were eyeing Indian iron ore for their own production.When the Indian steel manufacturers visited China last year, the Chinese Iron and Steel Association (CISA) mooted such an arrangement.