JSW Steel has surprised the market with a bumper profit despite growing uncertainty over geopolitical tensions. It has also announced a huge capex on greenfield projects in Odisha and Andhra Pradesh. The company is bullish on Indian economy and growth in domestic demand in the near future. Jayant Acharya, Joint Managing director and CEO, JSW Steel spoke to businessline on the way forward. Excerpt:
What led to better Q1 performance despite pricing pressure?
Though price moderated, especially in longs (TMT) and less in flat products, the Q1 performance had the benefit of tailwinds. In fact, steel prices started recovering in the March quarter and it played out fully in the June quarter. Moreover, our product mix was more oriented to flats. TMT prices was down due to labour shortages in some project locations. However, our specials and flats did very well. So the mix was more oriented to flats and specials, and that gave us a better mix in addition to price.
Do you see pricing pressure in Q2 due to monsoon slowing down infrastructure projects?
TMT prices have already moderated. The exit price in June was lower and this will have some impact in July in TMT prices. However, our exposure to TMT is very low at about 10 per cent. We are not anticipating much price movement on flats, wire rod, or alloy longs. They should remain range-bound. On cost, we expect coking coal prices to go up by $12 to $15 this quarter. Restart of BF3 (blast furnace) should give higher volumes in Q2. Additional volumes will help to mitigate cost pressure. Though the benefit of higher volume will be offset, to some extent, by rise coking coal cost. There will also be some efficiency gain. Moreover, iron ore prices have also started trending down, which will mitigate part of the cost pressure.
