Spreads Will Improve As Steel Prices Have Moved Up By ₹1,000-2,000/t: JSW Steel | CNBC TV18

The last quarter was a challenging quarter with respect to the overall economic scenario globally, as well as the challenges being faced by high exports from China. So we had an influx into India because India is probably one of the few countries which is growing at a fast pace. That resulted in sentiments dropping and the prices dropping in India. However, post the announcement of the Chinese stimulus package, the sentiments have improved. We have seen some international prices going up in China, which has also translated partly into India. So in October, we were able to increase the prices of flat steel and long steel between 1,000 to 2,000 rupees per ton, which we feel in a seasonally strong quarter ahead – quarter three and quarter four the demand is usually stronger – so we feel that is something which will hold up.

In the past quarter, although the price of steel fell, we were able to offset that through cost reduction. One of the enablers was coking coal, and coking coal prices in the last quarter went down by $27 per ton more or less, as we are guided. Going forward in this quarter also, we expect coking coal prices to moderate somewhere in the range of $20 to $25.

Yes, I think the capex we are seeing improvements on the ground, and that is why you see the long product prices having stabilized and going up marginally. But let's keep in mind that the price increase of long products or flat products that happened in October is on a very low base, which was exited in September. The prices had come down over the last few months, and that is now coming back to reasonable levels. I would say reasonable levels at this point of time. But yes, the demand on long products is reflecting the improvement in capex spending. The second thing is with respect to the international market. As you know, the international markets have been weaker; the demand because the economic backdrop has been weaker, geopolitical risks somewhat challenging, so therefore the demand has been weaker. On top of that, China, because of a local demand issue, has exported more steel. But the good thing is that we have seen China's production moderate over the last two months. It has come down to 77 to 78 million tons in August and September from peak levels of 90 million tons plus. So that hopefully will result in lower exports as we go into the winter season. That is one. Secondly, we see that more and more countries are raising barriers because that's impacting their institutional profitabilities. We are engaging with the Indian government, and we have taken some steps in some anti-dumping actions on some products. We are engaging with the government to at least find a level playing field with respect to low-priced imports coming into the export side. I think the domestic demand growth in India, which has been about 13.5% in H1, is basically reflective of a very strong demand. And this is remembering the fact that the capex in the first half was slightly weaker than expected, and weather disruptions were more. In spite of that, we ended the six months to September with about 73 million tons of demand, which is actually a very strong signal. So we used the opportunity to realign our products to the domestic market and thereby switch to more domestic. That's why we had about 93% domestic and 7% exports. Also, it was impacted as said by weaker international demand and lower prices in the international market as well.