JSW Steel Ltd, India’s most valuable steelmaker by market capitalisation, will focus on exports, cut costs and delay expansions as the coronavirus pandemic slashes demand at home.
Once a bright spot for global demand, steel consumption in India plunged 91% last month while crude steel output tumbled 70% as a nationwide lockdown to combat the pandemic halted activity across industries.
Recovery in India’s demand will be gradual and may only gather pace in the second half of the year as the industry is facing shortages of labour, logistics and liquidity, according to JSW Steel’s Joint Managing Director Seshagiri Rao. With India’s steel consumption forecast to decline by 10% this financial year, the steel mill will focus on exports for at least the next six months, he said.
“For companies like us the strategy is, whatever demand will pick up in India, we will service that demand, and whatever balance is being left out, we will export,” he said in an interview.
A drop in local iron ore prices and imported coking coal rates, together with a weaker Indian currency will make exports more competitive, he said. Owned by tycoon Sajjan Jindal, the steel mill plans to export more than the 3.1 million tons of value-added products it shipped out last year, to countries in Asia, the Middle East and Africa.
JSW Steel, which operated its plants at 38% capacity in April, has now ramped up capacity to 85% this month and aims to produce 16 million tons of crude steel this year.
The company, which last week posted an 85% plunge in its January-March quarterly profit, has identified key areas for reducing costs and deferred the doubling of capacity at its Maharashtra plant by half a year. It has also put on hold a $150 million modernisation plan for its US plate and pipe mill.