JSW Steel expects its volumes in the second half of the financial year to be 8 per cent to 9 per cent higher than in the first six months, while price increases and operational efficiencies are expected to help offset higher costs, Chief Executive Officer Jayant Acharya said in a Bloomberg TV interview.
The forecast comes as the steel producer works to improve margins through larger blast furnaces, a better raw-material mix and tighter cost management. Acharya said costs had increased, but the company expected to offset the pressure through higher prices and efficiency measures.
“Costs have gone up,” Acharya said. “But we should be able to offset this with prices and efficiencies.” JSW Steel took price increases in September and October, according to the report, with the revisions expected to support the company as input costs remain elevated.
Steel prices and production volumes have a direct bearing on construction and infrastructure supply chains, where the material is used across buildings, industrial facilities and transport infrastructure. The company’s expectation of stronger second-half volumes indicates an increase from the level recorded during the first six months, although the supplied report does not provide the absolute volume figures or a project-wise breakdown of demand.
JSW Steel is also pursuing international sources of coking coal, a key raw material for the blast-furnace steelmaking process. The company is developing coking coal mines overseas, including through a 30 per cent stake in an Australian operation, Acharya said.
Construction activity is also under way in Mozambique on a project that is expected to yield about 11 million tons of hard coking coal, according to the CEO. The report does not specify the project’s commissioning schedule, the investment involved or how much of JSW Steel’s future requirement the output could cover.
The company’s raw-material strategy comes as it seeks to manage the cost base behind its steel operations. The combination of price increases, blast-furnace efficiencies, changes in the raw-material mix and international coal sourcing forms part of the company’s response to higher costs.
For urban construction and infrastructure projects, steel availability and pricing remain operational considerations because changes in input costs can affect procurement decisions and project budgets. However, the supplied report does not state whether JSW Steel’s expected volume growth will change prices for individual construction segments or affect specific projects.
JSW Steel’s next reported performance and operating updates will indicate how the expected second-half volume increase, price revisions and efficiency measures translate into realised production and margins.
