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Amid slowdown in domestic demand, steel firms are focusing on exports, which of late have become attractive due to the rupee weakness, to protect their margins.
Major steel firms like SAIL, JSW Steel, Essar Steel, and RINL, among others, have also seen pick up in export demand in last few months after rupee started trading at over 60 level.
"Steel exports can see a growth of 20-25 per cent in present financial year due to the rupee fall," Angel Broking senior analyst (metals and mining) Bhavesh Chavan.
Chavan said though the brokerage firm doesn't have any estimate for overall export numbers for this fiscal, market sources have pegged it around 7 million tonnes by March-end.
On specific companies, Chavan said while for JSW Steel, exports are pegged at around 3 million tonnes, for Essar Steel it could be 1.5-2 million tonne this fiscal.
Similarly, Tata Steel may export around 0.2 million tonne, while SAIL is also likely to increase its exports to over 0.7 million tonne this fiscal, he said. Interestingly, some steel firms have already seen an uptick in their export figures in the second quarter. JSW Steel has seen 23 per cent growth in its steel products exports to 8,40,000 tonne in the second quarter.
"We aim to export around 3 million tonne steel products in the current financial year," joint managing director and group chief financial officer of JSW Steel, Seshagiri Rao had said while announcing the Q2 results. Earlier, state-run RINL had set a target to export around 1 million tonne by 2016-17.
"Export during last fiscal was around 8 per cent of the total volume. This fiscal, more volume is going to be exported. From the existing level of Rs 500 crore, revenue from exports may go up to Rs 1,000-1,200 crore," according to T K Chand, commercial director at RINL.
On the impact of exports on margins, Chavan of Angel Broking said the margin impact will not be much as operating margins are almost at similar levels for both domestic sales and exports.
"Margin impact will not be much as there is hardly any difference between margins of domestic sales and exports. However, the growth in exports will in some way compensate for subdued demand at home," Chavan added.
