Jindal Strips Ltd (JSL) is aiming at a production target of around 2.5 lakh tonne for the fiscal 1999-2000 on the back of the upturn in global prices of stainless steel. The company's production during the first half of the fiscal was 1.35 lakh tonne.
A senior JSL executive said: "Since nickel, the prime raw material for stainless steel, has to be imported, there is a lead time of 2-3 months between its import and consumption and therefore in a scenario where nickel prices are rising, operating margins will be higher. Further, with higher production levels, the margins are expected to improve as a result of economies of scale."
Nickel prices had dropped to a 13-year low in December 1998 at $3,800 per tonne leading to a crash in stainless steel prices worldwide. But, following a subsequent upturn in stainless steel demand, nickel prices recovered and reached a 29-month high of $7,695 per tonne on October 19, 1999, and peaked to 8,200 per tonne as on December 6, 1999.
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The ripple effect of these trends on domestic prices has been apparent from the fact that prices has increased by 10-15 per cent during the January-October 1999 period.
The average sale price of 200, 300 and 400 series grades of stainless steel at present are $750, $2,150 and $2000 per tonne, respectively. The company is also looking at higher export volumes with the export turnover for the year expected to touch $20 million. In the first half of the fiscal, the company exported 2,700 tonne of stainless steel valued at $4 million.
According to the executive, "The company has export orders worth approximately $7 million waiting to be despatched by December end."
The market for stainless steel products, according to industry experts, has been on an upturn on the back of a recovery in demand from Asia.