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| Steel sales spurt in February, expansion plans reopen |
| Ishita Ayan Dutt / Kolkata Mar 16, 2009, 00:23 IST |
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The steel sector is limping back to normalcy, with sales and despatches in February significantly better than the previous month, leading some producers to revisit expansion plans.
Jindal Stainless, with a 45 per cent market share, recorded its highest despatches in the past two years in February, while JSW Steel, Tata Steel and public sector long products’ producer Rashtriya Ispat Nigam Ltd saw sales move up significantly.
Industry observers feel this shows things are slowly reverting to normal in the domestic market, though not in the international market.
Arvind Parakh, director for strategy and business development, Jindal Stainless, said their despatches in February were 1.5-1.55 lakh tonnes, compared to less than 1 lakh tonnes in previous months. “This is the highest in a quarter in the last one to two years,” he said, noting that Jindal Stainless was now focusing on local demand. Earlier, it would export 40-45 per cent of its output; this has now halved.
The company had frozen negotiations for expansion in Orissa for around nine months; it is now revisiting the project.
Tata Steel recorded a 47 per cent increase in sales in February over the corresponding month in 2008, with long products (primarily used in the construction sector) registering a 65 per cent increase.
JSW Steel’s crude steel production in February increased by 8.5 per cent and the company commissioned its capacity expansion at the Vijaynagar Works, earlier on hold, during the month. Though the February figure includes trial production from expansion, the company had decided to revert to normal production in January, when sales moved up 41 per cent over December, after recommencing two furnaces.
Seshagiri Rao, director (finance), JSW Steel, said liquidity had improved and working capital had also eased. “Prices are now stable, with a little bit of activity in China,” he said.
As mentioned before, the demand spurt is largely local. For instance, in flat products, mostly used by the auto and consumer durables sectors, the global price for hot rolled coil was $485 a tonne; here, it is around Rs 32,000 a tonne, or about $820/t.
Neeraj Singhal, managing director, Bhushan Steel, said car sales and white goods sectors were pushing up demand, though commercial vehicle sales were yet to pick up. Bhushan Steel used to export 35 per cent of output; now it is 25 per cent. It recently finalised a rehabilitation plan for a Bengal project.
The scenario holds for the long products segment, too.
CG Patil, director-commercial, Rashtriya Ispat Nigam Ltd (RINL), said sales in February saw an increase of 35 per cent over January. “Local demand is going up, as ongoing projects are being completed,” he said.
However, the real test would be in April. Since the October-December quarter was an exceptionally bad quarter, the current one looked much better, said some industry representatives. The industry is hoping the new government will announce major policy decisions that would further boost demand.
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