The Indian steel industry will benefit further from the elimination of export taxes and China’s opening of its economy, and the fourth quarter is anticipated to be a better one. According to a senior official at JSW Steel, the decrease in the price of steel and raw materials would also create new export opportunities for the industry.
However, the sentiment for FY24 is “cautious” as overall steel prices will remain range bound and the margins will get normalised, JSW Steel joint MD and group CFO Seshagiri Rao MVS told FE in an interaction.
“After China loosened Covid-19 regulations and opened up its economy, steel prices increased by more than $100 per tonne in January as commodities prices also improved. The sector would benefit from the November export duty removal as well as a strong fourth quarter, Rao said in a chat with FE.
The overall state of the world economy is not good due to a number of variables, including high interest rates, challenging economic conditions, and the fact that each nation has significant debt relative to its GDP. The opening up of China may also be more driven by consumption than investment, and there is concern about a slowdown to mild recession, the expert said.
However, the Indian economy is in a much better shape as the macroeconomic parametres are “quite good”. The factors include $7.50 trillion in federal infrastructure expenditure, which is supported by state governments, a strong rise in residential development, a resurgence of the automobile industry, and strong growth in renewable energy sources like solar and wind.
“Due to the drop in the price of raw materials and steel, India now has export potential from regions like the Middle East, ASEAN nations like Malaysia, Thailand, and Vietnam, and Europe. The import of steel into Europe maintained at about 18 to 20 million tonnes, and production cuts in Europe are far steeper than demand,” he noted.
Rao stated that the company plans to release inventory by March of this year in order to reduce the debt by an additional 3,000–4,000 crore. As of December 31, the corporation owed 69,500 crore, of which 3,500 crore was the result of rupee exchange rate swings.
JSW Steel has decided against selling its Italian operations, including Aferpi SpA, as the company received a sizable order from Italian railways in the third quarter for about $900 million, and Q1 performance is anticipated to be strong.
Due to operations being hampered by growing raw material costs and geopolitical concerns, the company previously put its 2018 acquisitions of Italian businesses up for sale. Attempts to revive them also proved unsuccessful. For €55 million ($64.7 million or Rs 440 crore), it purchased the whole investment in three Italian companies: Aferpi SpA, Piombino Logistics SpA, and 69.27% of GSI Lucchini SpA. This was done as part of its intentions to expand internationally.
The company is on track with its capital plans to invest 49,000 crore, of which 15,000 crore will be spent in this fiscal year, 20,000 crore in the following fiscal year, and the remaining 15,000 crore by FY25. The corporation spent 10,707 crore on capital expenditures in the first nine months of current fiscal; the remaining amount would be invested in the March quarter.
source from: msn.com
