Indian steelmaker JSW Steel expects to meet its annual guidance of producing 15mn mt of steel in FY 2021, the company said in its standalone earnings report on Friday.

 

The steelmaker’s crude steel output fell 16pc in H1 2021 (April-September 2020) to 6.81mn mt from 8.08mn mt during the same period last year. In Q2 2021, crude steel production was flat at 3.85mn mt from Q2 2020.

 

JSW indicated in its earnings report on Friday that the company’s capacity utilization increased from 66pc in Q1 to 86pc in the quarter ended September 30, 2020, after numerous monetary and fiscal initiatives spurred the domestic economy and improved business sentiment.

 

The nationwide COVID-19 pandemic related lockdown during the first half of the year resulted in a weaker H1 2021 result for the company, which reported a 6pc decline in sales to 6.92mn mt from 7.35mn mt during the first half of last fiscal. However, a rebound in domestic demand in the second quarter saw steel sales rising by 14pc to 4.12mn mt from 3.60mn mt during the same quarter last fiscal and by 47pc from Q1 2021.

 

During the second quarter, Value-added and special steel product sales made up 51pc of the total steel sales after auto and coated product segments increased by 392pc and 83pc, respectively, JSW noted. The surge in the two segments was attributed to significantly higher activity in the automotive and white goods sectors after the lockdown.

 

JSW’s total steel sales in Q2 FY 2021

Particulars (fig in mn mt)Q2 FY21Q1 FY20Y-o-Y
Crude Steel Production       3.85        3.84 0%
Flat sales       3.12        2.58 21%
Long sales       0.77        0.85 -9%
Semis       0.22        0.17 29%
Total salable steel       4.11        3.60 14%

 

The higher domestic demand during the quarter resulted in the company’s exports falling to 28pc in Q2 FY 2021 from 57pc in the previous quarter.

 

Mining and project updates

JSW indicated that mining operations at two of the three iron ore mines it acquired recently in Karnataka, commenced on Sep 25, while the third mine’s operations will start soon. It also began mining at its recently secured four iron ore mine blocks in Odisha in July. The latter is expected to help the company to reduce its dependency on merchant miners in Odisha.

 

During the quarter, JSW also commissioned and undertook trial production at its 1.2mn mt per year wire rod mill. Moreover, the construction of its 8 MTPA Pellet Plant is expected to be commissioned in Q3 FY2021.

 

Standalone financials

On a standalone basis, the company reported revenue of Rs167.97bn in Q2 FY 2021 an increase from Rs155.2bn in the same quarter last year. The firm’s standalone net profit was reported at Rs16.92bn during the quarter, down from Rs29.17bn in Q2 FY 2020. 

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